Why You Should Make Industrial Real Estate your Focus
If you’re new to commercial real estate investing, consider making industrial real estate a focus. I did, and I don’t regret it. Why?
- It’s not where “the others” are focusing. It doesn’t have the glamor of downtown office product It’s dirty. So there’s less competition all around.
- It’s much simpler to learn. You don’t have to lean what a natural break point is, or a gross rent multiplier. You’re renting four roofs and a wall and some doors. You can be up to speed very quickly on market rents because it’s much or of a commodity.
- It’s less volatile. Rents don’t swing as dramatically up or down. Nor does vacancy. I’m not saying that there isn’t risk associated with industrial product, but you will never see the phenomenon we are seeing in retail right now hundreds of stores closing, all across the country, all at once.
- It’s easy to underwrite. There are only two major capital items that need attention in most industrial buildings: the roof and the pavement. Once you understand their condition, you’ve got a handle on how much to set aside in a capital reserve over the next 5 to 10 years.
- You can dress casually :). Generally whether you’re canvassing, meeting tenants or owners or brokers, you’re going to find a lot fewer people wearing suits and ties.
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Tags: Industrial real estate, warehouse
