The Commercial Property Playbook for Trades and Construction Owners | Cameron Jay

Commercial property can offer stronger cash flow and greater control, but the wrong tenant, lease or location can turn a promising opportunity into a costly problem.

In this upcoming episode of Built. Trusted. Chosen., I speak with commercial buyer’s agent Cameron Jay about how trades and construction business owners should approach commercial property. We discuss owning your business premises, investing elsewhere when your current premises are not available, assessing tenant and lease quality, and understanding when the same property could be a smart purchase for one buyer but a poor investment for another.

You’ll take away:

• An investment should wash its own face 
• Knowledge offsets risk 
• Buy the lease and tenant before the building 
• Owning your premises is not the only path 
• The same property can be a smart buy or a poor investment 
• Specialist advice can create speed, safety and value 

Cameron Jay is the Director of Investwise Property and a commercial buyer’s agent who helps Australian investors and business owners source, negotiate and secure commercial property. Drawing on decades of business experience and a background in commercial real estate, he focuses on identifying risk, assessing leases and tenants, and finding opportunities suited to each buyer’s goals.

Website: https://investwiseproperty.com.au/
LinkedIn: https://www.linkedin.com/in/cameronjay/

I’m Wes Towers, founder of Uplift 360 and host of Built. Trusted. Chosen. I help trades and construction companies be built, trusted and chosen online through high-performing websites and Search Everywhere Optimisation.

https://uplift360.com.au/

This conversation provides general information only and does not constitute financial, legal or taxation advice.

Want to be a guest on Built. Trusted. Chosen.? Book here:
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Transcript

SPEAKER_01 0:00

Welcome to Build, Trusted, Chosen. The podcast for leaders and marketers in trades and construction. Hosted by Wiz Tales from Uplift 360.

SPEAKER_00 0:13

Okay, g'day Cameron. It's fantastic to have you on the show. You were introduced by a a colleague, uh a friend, mutual friend, so great to connect and and uh learn more about what you're up to. Uh but just uh briefly, if you want to tell people who you are, what you're up to, we'll unpack it, of course, as we make progress. Uh but just set the fo the foundation, uh, tell us who you are.

SPEAKER_02 0:32

Well, I'm uh yeah, thanks, Wes. Um great to be on. I uh I'm a commercial specialist, boy's agent. So I source and buy property for uh for people that want to um invest in or inhabit with their own businesses commercial property, be it office, be it uh retail space, be it industrial space, whatever.

SPEAKER_00 0:57

Yeah, love it. And it's obviously a topical uh moment, certainly for our Australian audience with everything changing. And obviously um there's people looking where where do we put our money now and and commercial property? It's certainly popping up in my feeds as a viable option, even more so than it was probably pre pre-budget, with um you know people looking for the cash flow positive properties and um how that all plays out. What what are you getting uh inquiries on lately? Have you seen anything shift since um the crazy budget was announced?

SPEAKER_02 1:27

Yeah. Yeah, my uh my it's funny. The budget was announced, was it a Tuesday night about three weeks ago now? Um and uh my inquiry dropped off a cliff. The phone went dead for probably three days, four days. I might have had a call or two or an email or something by the end of the week. But the following week and up until now, it continues to roar. Lots and lots of people with particularly with one or two or more, but lots of ones and twos, um, residential investments that are going, hmm, I was just about to buy another residential investment, but I don't think I will now, because commercial property is really not affected by um by all those rulings, because generally speaking, the income is so much stronger and and and quite closely tied usually to the cost of borrowed capital, i.e., at the moment, investment funds are about six and a half percent, and yields are six to six and a half percent. Um there are different deals that are above that are a bit risky, and there are different deals that are below that are a bit safer in inverted commerce or perceived to be either riskier or safer, but generally speaking, most of the stuff I'm seeing it it stays pretty well closely pegged to the cost of borrowed capital. Therefore, um whereas residential stuff is two, three, four percent, depending on where you are, and that's gross. You've still got to pay out all your outgoings. Whereas the commercial stuff, the tenant pays all the outgoings. So network is all yours. Exactly. Yeah, much less stress, much less hassle.

SPEAKER_00 3:12

Yeah, and we better better just cover off for the audience too. That none of us, none of us are neither of us are giving financial advice or anything like that. We don't know your personal circumstances, all that. Make your own adult decisions and research, but we we're speaking in general terms. And you and you're right, so the negative gearing obviously isn't a factor if you're getting it either neutrally or positively geared, which uh is the is the attraction of of commercial property. So for the trades and construction-minded people out there, because that's our audience, how how should they be thinking about some of this stuff that's happening right now?

SPEAKER_02 3:46

Um well, it it depends on on their circumstances and what and where they're trying to achieve. So there's there's lots of possibilities with regards to if they're looking to invest, I would clearly think um commercial is a is a better investment at this point in time and moving forward. The budget stuff, I would you've got to expect that it's gonna get rolled in. However, if you look at history, there's a very, very good chance that by the time we get the other side of the next election, it'll all be reversed back to the status quo that we know now. Because historically, he Katie brought it in and it got he had to pull it back. Um, Shorten took it to an election and lost. Jacinda Rodan put it into play in New Zealand and then um uh I'm trying to be nice. The term I think of is had her ass handy to her, you know, in a in an election, a landslide. Landslide's the nice word. Landslide changed her and it got and it got reversed straight away. So you you would have to, if you look at history, this isn't gonna be around forever. So if you've got a long-term um hold for hold horizon on a property that you're looking to buy, regardless of whether it's residential or commercial, you're probably not gonna be in any in a different place. But the people who rule the land have said we're doing this, so you have to plan around that. But I just think long term it's likely to go back to whatever's here, but you need to have it front of mind. In the interim, what do you do? If you have a long-term view on property that you've currently got, I would keep that. If you have a short-term view and you're looking to trade it, um, you are probably going to have a better capital gains tax outcome if you sell before July 2027 than what you are if you hold it longer than then.

SPEAKER_00 5:40

Yeah. I suppose that you can never make long-term decisions based on what potentially is short-term um you know, tax implications and so on. Obviously, who knows? As you said, things get reversed all the time. That's the pattern that we we can uh only assume will happen at at some stage. You you wouldn't see how it is.

unknown 6:01

Yeah.

SPEAKER_02 6:02

The people that do this deliberately quickly, try the people that buy flippers, for instance, buy a house, do it up, flog it. Yeah. Um, they the the most effective way of doing that is through a company anyway. Otherwise, capital gains and rip it all out of you, you get 30 cents in the dollar as opposed to 50 cents in the dollar. So they're already using companies, and all it means is the people in the medium term are probably going to be better off using a company like someone who flips houses would. Because it it it's it it's uh it covers a shorter time frame for making a profit. But if if it's a long-term goal, I wouldn't I wouldn't worry. Yeah. By all means, you you need to talk to an accountant as to what is likely to be the best holding entity over the long term or short term or medium term. Yeah. I think they've decided to know what bucket to stick everything in.

SPEAKER_00 6:55

Yeah, and a little bit of the diversity never can hurt as well if you've already got a couple of reses, then you probably realistically should be looking at alternatives. And this is the massive advantage that I think small businesses have in that I I guess the fear with commercial property is if you do have a property that's empty, it can be empty a long time. What if you're own you're your own tenant? You know, this is the massive advantage. If you're buying um a commercial property and you can uh utilize it, rent it to yourself effectively, and then that that worry is one more one less hassle. Do you see that playing out a little bit with um total small business owners? Yeah.

SPEAKER_02 7:35

Yeah. But the long, the long, just to step in, there's a few myths with commercial property. First myth, generalization, that must have been created by residential agents years ago, but people think incorrectly that there's no capital growth with commercial rubbish. Um, there's actually no difference. It's just there can be a time lag between when it kicks in, and I'll explain why in a minute. Um, also, people think you need a fortune to get into commercial property. Not true. I've bought really high performing little assets for 200 grand, 250 grand. Like it, you don't need to be spending house money. You can be spending less than apartment money and buying, you know, really high performance little starters for your portfolio. Um the other thing is, so yeah, and long vacancy. Long vacancy does happen. You know, we've all remembered that butcher shop that shut because uh we colden woolies went crazy doing doing meat, etc., and it had a full leaf sticker on that got all dusty and faded and all that sort of year. But those generally speaking, knowledge offsets risk. So you just need to have an eye on the market as to how uh what how broad a specific space or building or property is going to have to the market. It might be retail, in for instance, is very versatile. It might be at the moment a restaurant, but the restaurant closes, but the space is still a really good space and a really good strip or area or whatever. It has plenty of foot traffic. Someone might come in and go, Well, let's just put a lid over the grease trail, get rid of everything. Um, I want to sell dresses here, and it turns into a retail shop. Then so it's it's really about how versatile is the space and how broad is the um the appeal to the marketplace to that space in that area. Same goes for uh for industrial, you know. Um, but yeah, what you want to watch with investments is things that are one-off, you know. Everyone wants a warehouse because everyone wants space, but a refrigerated warehouse, ooh, only 10% of the market or less than 10% of the market are actually going to want to use that space. Because the the fact that it's full of polystyrene means that the insurance is going to be a bit dearer because insurance companies don't like polystyrene line places. Plus, there's refrigeration equipment that has to be looked after by somebody, might be you, might be the tenant. Um so that creates A, it creates uh complexity, and B, the big issue is a much, much smaller part of the market wants to use the space. So it's about using your noggin as to what you buy. Don't I always say don't ever buy a flour mill because the mill is the only person that'll ever rent it to you. Rent it off you.

SPEAKER_00 10:23

Yeah. Yeah, that makes a lot of sense. A bit of diversity enter forward, project what uh might what things might look like in a certain region and town. And um do you do you find the cycles I don't know much about commercial property, obviously, but the do you find the cycles kind of follow the same pattern as the resi cycles that um very much and follow is the active word.

SPEAKER_02 10:46

So so two things to put in take into account. The commercial market is only 10% the size of the overall market, or well, sorry, 10% the size of the resie market, both in terms of how many properties and what they're worth. Um so the the dollar value of the residential fleet, for want of a better term, and the dollar value of the commercial fleet, it's about nine to one. 10%, 9%. Um therefore, when residential sneezes, commercial catches cold, to be sure. Yeah. But there tends to be a lag, and the lag is about average lease expiry. So property growth and price growth is all about, regardless of what it is, is about supply and demand. So over time, um demand and supply seesaw. And when you have low demand, you have static price growth. And when you have high demand in relation to supply, price pricing goes goes silly. So say you have this the the capital growth ferry comes through an area, you you buy a house in, let's say, Australind, which is a new development or a new um suburb, new west suburb just out of Bunbury in Western Australia, which has had a pretty good run lately residentially. Um, and I like Bunbury as far as commercial goes, because I like um the city and the statistics and what it is. Western Australia is wealthy. Um wealthy Western Australians, us East Coasters, we retire to the north. West coasters retire to the south. Um, Bunbury's a good place. But let's let's say they have really, really strong capital growth through this year. You will find, and for some reason, then the market cycle moves sort of somewhere else and it slows down a bit. You'll find that's like a window. You know, it'll spend a bit of time ramping up while the window opens, it'll stay open for a while, and then it'll spend a bit of time ramping down as it closes, and the cycles move somewhere else for whatever reason. Yeah. You will you will find that that closing, opening, and closing is quicker because the average lease expiry on a residential property is 12 to 18 months. Some people, sure, they've stayed there for 25 years, but the statistical average is much, much shorter than with a a business. Business people are setting up business there. They don't want to destabilize their business, they want to make money, they want so some people like to grow, but a lot of people, and for by and large, they want to stay. Um, so it's about two to three years is average list expiry. And that's why it's about two to three years after the Capital Growth Ferry has been through Australind and gone, oh, your house value went from one mil to 1.2 million in a year. It's about two years later that the commercial will reflect that because it takes two years for the landlord to be able to put the rent up.

SPEAKER_00 13:48

Yeah, got it. Yeah, that's a bit of a drag.

unknown 13:51

Yeah.

SPEAKER_02 13:52

That's right. When the rent goes up, the yield increases. So when the yield increases, that adds capital growth to a commercial property. Whereas you don't yield isn't isn't part of the equation when you're pricing a residential property.

SPEAKER_00 14:04

Yeah. Yeah, that makes a whole lot of sense. And and because uh the um cash flow is is neutral or positive, even if you do buy at the wrong end of the cycle, you you're not it's not uh you're not gonna sink in the in the meantime. Yes, you might yeah.

SPEAKER_02 14:24

Yeah, i if you get it wrong, you can still negative gear capital uh commercial property. It wasn't it it's not part of what just got rolled out. Really? But the understanding of the contract is you have to try to be able to negative gear commercial property.

SPEAKER_00 14:37

Difficult to do.

SPEAKER_02 14:39

Yeah, there's it's usually quite deliberate because on its own, it should be able to wash its own face financially from day one.

SPEAKER_00 14:45

Yeah. Once you've got a tenant in.

SPEAKER_02 14:48

Yeah, common misconception is people think I'm investing in this house. Well, whatever property, but generally housing. So I invest in this house. They put down a chunk of cash as a deposit, they get themselves a loan, they buy a house, all good. End of the first month, they've got to put in, you know, the equivalent of 40 bucks, 50 bucks, 60 bucks, 80 bucks a week to hold that. Well, that's not an investment, that's a speculation. But what they're actually doing is they're buying something that they have to keep throwing money at to hold their position in the hope that it's going to gain in value. What they're actually doing is betting on the gain in value. Whereas with a commercial investment, the idea is you put a chunk of cash in, end of the first month, bit of money comes back your way. That is an investment, not a speculation.

SPEAKER_00 15:33

Yeah, that's nice. And it's it's good, that's why it's so good for your like your self-managed super fund as well, because you know, as you're edging into retirement, you haven't you haven't got extra money to throw throw around like you you may have done uh in residential property as a as an employed person. Um, you know, it's it's uh taking care of itself.

SPEAKER_02 15:53

After a lifetime and you you're getting sorry, a a a working lifetime when you're getting close to retirement. I think the aim is to have plenty to throw around and choose where you want to put it. That's certainly the hope.

SPEAKER_00 16:04

Well that yeah, yeah, that's right. Yeah, and so with the construction people, trades people in mind, um, how should they start thinking about what what we're talking about? So obviously that there's the potential, I think I said before, they could they could buy something and be their own tenant, and that's one option. Or if the numbers don't stack up as well in your region and town, maybe the town has uh vulnerabilities, not sure. You can look elsewhere as well if you think the numbers stack up elsewhere.

SPEAKER_02 16:36

Yeah. So two things, two things I do a lot, having been a commercial agent in the past, um, and it's things that I saw then, and it's still things that I'd say, hey, I've seen this. You'll have a tenant that has a few bob in their SMSF or wherever, but their business works very well at the site, but they don't like the fact that their rent is paying off someone else's asset. And they're like, hey, I could I could do this for myself. So the first question is, do you does your business really like, is your business really comfy here? And if it that's a resounding yes, because you've got to think if you move business, does your client come to you? If your client comes to you and you move, you're gonna lose clients. End of story. Yeah. Whether no matter how hard you try, you're gonna lose clients. There'll be people you don't know are on your data, that they're the people that are in the mental database, not the one in your computer, that go, oh yeah, we know where to go to blah blah plumbing supplies because they're there. And then they move and they're like, hang on, it's not there. You will lose clients when you when you move. Plus, there's a logistical cost of actually uprooting and moving and setting up somewhere else. Um and and the administrative, what the difficulty of trading through that point in time. So there is a cost in moving. But what generally happens more often than not, you go to the landlord, and the landlord's either an accumulator that doesn't need to flip properties and doesn't want to play, or the landlord goes, ooh, captive audience, and they get greedy and they blow the deal up. Sometimes, if if the person is approaching retirement, like the land the landlord, if they're approaching retirement or something, yeah, you can do a deal. And they're re they're reasonable. But it's not it, yeah, it doesn't always work out that way. But it's not the end of the world. So if you can't, you just do what I call parallel investing. And that is, you take the amount of money that you would have used to buy this place that your business is quite comfortable in, and you use it to buy something else, possibly that is performing better than what yours would if you owned it.

unknown 18:47

Yeah.

SPEAKER_02 18:47

You continue to pay off your asset to whoever your landlord is, someone else's part sorry, you continue to pay off his asset with your rent, someone else is paying off your asset with their rent. At the end of the day, you're in the same position or better. You don't have to move. It's a it's a little bit like a commercial version of what they call rent vesting. Where you can rent your own house. Yeah. You know, can't afford to live in Bondi, but I can afford to rent in Bondai. So I get to live in Bondi while I'm renting and build up a portfolio of residential houses around around the traps in in in possibly cheaper areas, and then sometimes what they'll do at the end of that is let's grab all our equity or sell all those properties and buy something in Bondoi because we actually love living in Bondo, and all of a sudden we can afford to be there.

unknown 19:36

Yeah.

SPEAKER_02 19:39

It's the same idea. Works in commercial parallel investing, it's a commercial version.

SPEAKER_00 19:44

Yeah. And with um how's the supply? Because obviously houses are a massive this the one thing that keeps everything ticking along in the positive direction for the most part, even in even in current uh circumstances, although although Sydney and Melbourne are obviously each struggling. Um the supply and demand issue with um residential property is always propped it up. How's supply going in commercial? Does it depend on the location or what's going on?

SPEAKER_02 20:10

It very much depends on the location. You in your uh in your neck of the woods, my friend, commercial-wise, particularly industrial commercial in the Geelong area, um, generates its own weather as far as price is concerned. It can and and it has been totally through COVID since COVID, way in front of the same product in southeast Melbourne, you know, something in Ackenham or versus something in I'm talking industrial sheds, so that concrete box, steel roof, concrete floor, concrete walls, little office and some glass at the front. Very basic, same product, yeah, making much, much more money in Geelong. However, as we get to the top of the property cycle, or what happens, and we are at the top of the property cycle, what happens is land gets expensive. You know, land becomes a little bit so fisos, and the people in the building game will get this, it's much, much harder for a residential development to FISO up. So there's lots of developers out there that can't get a job together or enough jobs together, and they know a couple of mates that have been building concrete boxes in Melton or Packingham or you know, whatever the area may be, but Geelong is a in case in point, the pricing in Geelong is really, really good. So people are like, ooh, a little bit of extra transport, get in the concrete panels down Geelong Road. But apart from that, so your logistics are a bit dearer, but let's go and hit Geelong. Well, we find a situation whereby Geelong's got a bit of a glut. There's a few different developers, and a lot of the ones that are sitting on product are actually people that don't always do concrete boxes, they do housing. But they haven't been able to get the housing to Speezo, so they've and there creates a glut. All of a sudden the pricing you know levels out, call it what you will. All of a sudden it's harder to move. You know, 2023, 250 metre concrete um industrial strata shed, you would have it sold before you had the keys. You know, I was selling off plan. Now how many would you like? They're everywhere.

SPEAKER_00 22:28

Yeah, yeah, yeah. Those cycles you've got to be prepared for. I was talking to a guy, he's I won't mention his name, but he's in commercial in Geelong. It must have been about three, might have been six months ago, three or six months ago. He was just saying how it was he was having his best um time ever financially. Moving properties, commercial properties, but he didn't feel as though it was going to last forever. He's been around long enough to know um the cycles uh change. And so it's curious that you're saying it's kind of changing already in Geelong a little bit?

SPEAKER_02 22:58

It's just the current situation at the moment. Um I had been told by a few people that I that I know who had been sourcing stuff down there, and they'd said, Oh, a bit of a glut in Geelong. And I'm like, Really? I I thought it was, you know, like Northern Gold Coast, like price itself into oblivion and still go on full steam ahead. And they're like, no, no, there's actually there's too much stock. There's too much stock, which isn't the case in the Gold Coast. The Gold Coast is a nightmare. I bought all over the country, so I have my finger on the pulse pretty well. So this was less than a year ago. Uh, and since then I've actually had people go, oh, I know this developer and he's sitting on stock and he cannot move. You know, what would you do? Can you introduce, you know, can you introduce agents that are goers who might be able to sort of help this situation, which I have done, but was like, yeah, very strange. I'm thinking Geelong's absolutely the cherry on the cake in Victoria. And uh and that turned him just because it was oversupplied over a couple of years.

SPEAKER_00 23:56

Yeah, well, the population growth is anticipated to be pretty significant here. Obviously, the internal migration of Australia, uh Geelong is massive. Um I was uh in that.

SPEAKER_02 24:06

Just to jump on that, I was the the biggest um the most internal migration in this country for ages has been the Sunshine Coast. And only the start of this year or late last year, uh Terry Ryder hotspotting, he's gone, it's actually Geelong.

unknown 24:23

Yeah.

SPEAKER_02 24:24

More people moving to Geelong than anywhere else in Australia. Amazing, isn't it? So that glut isn't going to be there forever. It's just a point in time now whereby demand sorry supply has exceeded demand for a market reason.

SPEAKER_00 24:41

Is that partly because when you so some of these tilt slab type uh places, the small warehouses, you all of a sudden you have a massive amount of them because they all kind of get built tilted, you know, in the same time. Is that part of it? It's kind of like apartments. If you build a massive complex of apartment building, you know, all of a sudden you've got heaps of apartments in the market all at one time. Is that part of what's going on?

SPEAKER_02 25:03

Or is that they go up a lot quicker than housing does.

SPEAKER_00 25:07

Yeah.

SPEAKER_02 25:07

Um they get, you know, from from DA application uh into the into the council to here's the keys is a lot faster than if you're not building one, you're building eight, twelve, thirty, depending on the size of the complex. Yeah, I'm not talking about people just building one. Building one's probably even quicker, you know, one 500 meter versus 10, 250 metre ones.

SPEAKER_01 25:37

Yeah.

SPEAKER_02 25:38

They're very fast to be ready too.

SPEAKER_00 25:41

Yeah.

SPEAKER_02 25:41

So yeah.

SPEAKER_00 25:42

Yeah, that's right.

SPEAKER_02 25:43

So that's what is it the end of the world in Geelong? God no, not at all. But just out there's really good buying right now.

unknown 25:50

Yeah.

SPEAKER_02 25:51

If you're an occupier, you're someone that's renting something um in uh in the Geelong area and been thinking about using the old SMSF to buy your own place. Now's the time to do it because there's lots and lots and lots of developers that are sitting on stuff, they're paying money for it to sit there. Um yeah, that it's a buyer's market very much. Just for that sort of thing, just at the moment. It's just one of those times, like you said, does the market move around and in different places? Because it's far more at the moment a problem in Geelong than it is, say, in Melton or Pakenham or other areas where that stuff goes on. However, generalizing there is a little bit of oversupply in all those other areas as well. It's a little bit more concentrated in Geelong, that's all. So to the point where it's worth a discount in Geelong, it just means it's going to take a bit longer to sell in Pakinham. Does that make sense? Yeah. So it's probably not as bad.

SPEAKER_00 26:47

And this is why people need it, uh, in my view, need to get advice around this kind of stuff because it's unfamiliar territory. And so the difference of making a poor choice and a and a great choice would be poles apart. I mean, people get it wrong in residential, but at least most of us, we live in houses, so we kind of know and we know suburbs, and we we understand that to a degree. We know our our own location at least, anyway. But this is different territory for anyone, you know, for anyone dabbling without expert knowledge, um, it could go horribly wrong and um mess up your future.

SPEAKER_02 27:25

You know, yeah. As also before knowledge offsets risk. If you want to buy something like that for yourself, really good time. If you want to buy an investment, you don't want to buy one of those because you're gonna buy straight into um oversupply, which is gonna mean you're competing with how many other people to try and find a tenant because there's people that have bought these things as investments and they're they sit in there gathering dust. Yeah, really good place to buy something for yourself, really bad place to buy something to invest in, exactly the same property.

SPEAKER_00 27:54

Yeah. Yeah, I'm sure there'll be a lot of listeners just tuning in and thinking, yeah, this is something I want to I want to do, either, well, for the for their own premises, you know, uh the trades, construction people need uh something. Um and uh it there's a whole lot of benefits to own it yourself. As you said before, you don't have to own your own, you can own something else. Um what what are the ways in which you support obviously that's that's you've been so generous with your advice and tips and so on. How do people sort of find out or engage you potentially?

SPEAKER_02 28:29

Well, it's uh invest wise property. Um it's usually people will come to me through my uh through my website, starts off with an email, I answer it with a phone call very quickly, and it's really just a chat to see who you are, where you are, where you'd like to go, um, and you know whether whether I I can see a way forward, whether I'm the right person. And the most common scenario is because it just starts with it, it starts with the chat. I'm not much of a salesman, but I'm a um I'm a good agent. So how that works is how you going? Yeah. Um well, do you have finance sorted? No. Do you have any idea what sort of structure you'd think about buying a property new? No. Okay, cool. So how good's your accounted? Good or bad, either either, it doesn't matter. So get the accountant sorted, either I can point you in the direction of one that can help you, or you go and talk to your own. Finance, do you have a broker that does commercial stuff? No. Okay, fine, I'll put you in touch with a broker that's that does commercial stuff once they're ready to go, and that takes, you know, weeks, six meetings, months, six weeks, whatever. Um, well then, okay, now we're now we know what you're capable of. Do you want to stretch to that limit? Do you want to keep a bit of gum powder dry? You know, and uh what what are your long-term goals? And then we work it out. I don't particularly go looking for offers or people off often say, what's hot at the moment? Um industrial, retail, Queensland, Western Australia, Melbourne. Answer's yes. Because what I do is I go, look, I go looking for hot deals. It's not about the property, it's about your money. You want to give me a chunk of money, or you want to give the bank a chunk of money to deploy, or I deploy it into the marketplace, hoping to get as much benefit with as much safety as I can. And they're all there's so many different elements, like talking about Geelong and and the little oversupply just at the moment. You need to be aware of what's going on in the market. So, what I said with knowledge offsetting risk, I know what's going on in the market, so hopefully I can offset those sort of ooh, whoops, yeah, made the wrong bought bought the right property at the wrong time. That'll do any arse, you know?

SPEAKER_00 30:44

Yeah, for sure. It's not something you want to play around with on on your own terms, I don't think. But the um one thing that um sprung to mind, and it's it's neither of our you know, core it's n uh knowledge, but uh the getting finance, how how does it stack up compared to someone going out um getting a a home loan? Is it is commercial property any different or how does it be? It's it's a little different.

SPEAKER_02 31:10

Um I mean you see you boy a buy a house, buy a factory, right? In you have a property, you have land, and you have finance. And at that point the the similarities end. Um particularly if they're an investment. It's a little similar, it's a little simpler if you're buying for yourself, for your own business, because you don't have that due diligence that has to be done on your tenant. Because that's invest in in investments, commercial investments are really what I do the most of. And the first thing we need to do, we're we're actually buying the lease. So I need to go in and look at the lease. Your question was finance, um, a bit bigger deposit, and yeah, the rent is really seriously looked at and taken and viewed in your favour by the bank. Whereas you we you have a smaller deposit for residential, and they don't give a toss about the lease income. All they want to know is how much you earn.

SPEAKER_01 32:13

Really?

SPEAKER_02 32:13

So it's all about your serviceability. So those two things make a big difference. You cannot be in a very strong position financially because you're sorry, you've got a chunk of cash or equity, but you don't earn a whole bunch. But you find a commercial investment that has a ripping lease, the bank's gonna take notice of that and not worry about the fact that you know you're not gonna be able to um service it. It's all about the tenancy. So if they see the insecurity in the tenancy and it's got shitloads of income, pardon my French, off we go.

SPEAKER_00 32:42

Yeah, that protecting our interests makes a lot of sense. Yeah. Correct.

SPEAKER_02 32:46

And that's not that's risk again. A guy who specializes in not occasionally does a commercial deal, is gonna be a better broker than one that does, you know, house house after house after after, and then occasionally does a commercial because his residential client wants to buy their own factory.

unknown 33:04

Yeah.

SPEAKER_02 33:04

He's not gonna get the job done as slick as someone who does commercial stuff all the time.

SPEAKER_00 33:10

Yeah. And even just as clunky, that's all. Yeah, even the power of having expert guidance to um negotiate uh the deal, you probably save, you probably potentially save back the the fee and plus some anyway.

SPEAKER_02 33:26

Um I've never seen I've never on a commercial deal, I won the residential deal that was the customer was madly in love the with the property, the um the vendor was not gonna budge, I couldn't get anything done. I did a little bit of horse trading and and and got them some value in a different way, but that that was a res a residue because the the client fell in love with the house and came up with the stone wall. But apart as far as commercial is concerned, I have never bought a commercial property whereby both me and the client couldn't see value well in excess of what my fee was.

SPEAKER_00 34:02

Yeah, yeah, that's it.

SPEAKER_02 34:04

You're buying speed and you're buying safety and you're buying um Yeah. There's a lot of things that that I bring to the table. And and look, I'm I'm not the only one that does this, but by yeah, professional help is is well and truly worth it when making these sort of these sort of decisions. Getting back what I was saying before about tenancy, that's the with an investment, that's the first thing that you're buying. So it's all about how long's the tenant been there, how well do they fit the business? Does the business look like it has long legs in the world? You know, are we buying a video easy store? So we've got to look at that app. Um yeah, and how long do they look like they want to be there? Do they have a lot of options lined up? You know, they're in one one lease term, but they've also got another five years and another five years after that. So it's all about the lease and the tenant first. When you're buying an investment, the building comes last. It is the last we look at.

SPEAKER_00 34:59

Yeah. That makes sense because yeah, you see businesses that are never gonna move. Like I don't know, the fast food chains probably some of them own their own properties, but those things never gonna move, the fast food outlet. So if you can own the building, you know you're secure for it, and it's a really solid and viable business, they're never going anywhere.

SPEAKER_02 35:19

So uh and the banks are very much on board with that. So that's what I was thinking about. That gets back to what I was saying. You um you're not gonna have the the the really super safe and secure stuff, market forces will mean that the yield will be lower. You know, you put a factory up at occupy up at a portfolio auction where you've got a heap of stuff on the one day, you put a factory up that's got a good solid tenant that's been there for years. Sorry, and um you're probably gonna get a six to six and a half percent net yield in a capital city. Whereas same city, round the corner, McDonald's store, you're gonna get four percent.

SPEAKER_00 35:56

Yeah. Because you've got to pay a premium for that quality. Yeah. For the security. Yeah, that makes sense.

SPEAKER_02 36:03

Those sort of assets tend to be places where people park big chunks of cash because they need to protect the big chunks of cash. Are they gonna grow in value at a thousand miles an hour? No, but they're not gonna lose value, and that's the motivation for dropping big chunks of cash. Therefore, they're not lending very much. It's not a deposit. You these things are usually paid for outright. So it's a 4% safe haven for a big chunk of cash. Not the sort of thing I buy for mum and daddy investors.

SPEAKER_00 36:34

Yeah, that's right. And the way inflation is, you really you want to get a good uh yield and uh and obviously growth as well, to even just to stay equivalent to what your money's worth right now, you need a pretty pretty sizable um yield.

SPEAKER_02 36:49

Yeah. I thought okay, so you still go for less than three percent when interest rates were four and a half. I'm like, why would you do that? Why on earth would you do that? But it's it's that safe haven mentality. I I spoke to an institutional buyer and he's like, There's different reasons people buy property, and particularly, you know, very, very mega rich families or offshore or whatever, you know, they're looking for asset protection. They'll have an element of their pool of funds where they're happy to have a bit of a crack, but they have big areas where they just want to make sure that their cash doesn't diminish. Yeah.

SPEAKER_00 37:26

Yeah, just hedge them a little bit. Yeah.

SPEAKER_02 37:29

Whereas dealing with mums and dads and small business people and stuff, I'm trying to have a crack and make a dollar for people as well.

SPEAKER_00 37:36

Yeah, yeah, of course. Now, this has been brilliant. Thanks so much, Cameron. And um, you mentioned how to get a hold of you. So the the website I'll put in the show notes. So, what was the web shops website again so people could find it?

SPEAKER_02 37:46

Uh www.investwiseproperty.com.au.

SPEAKER_00 37:51

Awesome. Yeah, so I'll put that in the show notes. Everyone can find it easy. Uh any parting words? Anything we we should have covered that we didn't?

SPEAKER_02 37:58

Um my phone numbers 0427 007 009. Um but as far as yeah, no, didn't didn't we we covered a lot of stuff in just 40 minutes? I think we don't remember.

SPEAKER_00 38:10

Yeah, yeah. It's been brilliant. It's fl flowing by. You always know it's been a good conversation when it uh feels like it flies by. Thanks so much. Uh see you again.

SPEAKER_02 38:17

You're welcome. Thank you. Thanks for having me.

SPEAKER_01 38:19

Thanks for listening to Built, Trusted, Chosen. Brought to you by Uplift360. Visit Uplift360.com.au.