Post about "Property"

Industrial Property Performance Factors

Many property investors choose industrial property as their first type of property investment outside of residential property. This then shows that the first time or smaller property investors believe that industrial property has key advantages for them.

The main advantage we can see frequently is that industrial property is relatively simple and basic when it comes to property performance. It is not hard for property investors to know what to do and what to control with property rents, leases, and property maintenance.

So what could be some other elements of industrial performance that are worth considering if you were and investor and you wanted to purchase a good property or something with real potential? Here is a list to get you started.

These are the most common points of concern and focus in industrial property that we come across as we speak to many investors, tenants, and real estate agents.

  1. Transport routes to the property and those that are used by a typical industrial tenant must be understood. The routes must be easily accessible as a system of raw material supply and product distribution.
  2. Many tenants need raw materials as part of their business operation. What are these raw materials and how easy is it for the tenant to get them? Look at the access factors for air transport, shipping and port access, together with freeways and the main road networks.
  3. The power to the property should be of the type that industry uses. In most cases that is what we call ’3 phase’ or ‘high tension’ power. It is the type of power supply that industry needs for large machinery function. If this power is not available you will have to assess how much it will cost to get it to the property.
  4. Cost and supply of labour force is important to industrial tenants. Invariably they will need people to work in the business. Proximity of the industrial property to local residential areas or towns will help with a source of labour supply; however another advantage with this will be access to public transport for the employees.
  5. Moving the end manufactured goods to their market is quite important to the industrial tenant. Today we see reasonable flexibility with truck transport and road networks however some very heavy or bulky goods will need rail heads as a point of distribution. Rail transport still has the advantage when it comes to large volume and heavy goods.
  6. Industrial property investment seems to be strongest in performance around major cities with established growth cycles. Even in a slow economic cycle these industrial properties will perform given the interaction with the community and reasonable access to end markets.
  7. In good property markets the industrial property tends to give higher levels of return when compared to office and retail property. This is an analysis on average so the other elements of location, tenant selection, and market access are still important to the equation. The industrial property market is still robust when economic cycles are positive.
  8. When economic cycles change to the positive, it is the industrial property that responds first even before office and retail property.
  9. Leasing industrial property is basic and simple. Vacancies are easy to manage providing the property is not too special in design that limits tenant usage.
  10. Rents are usually on a net rent basis and the tenants normally take responsibility for the payment of outgoings. In saying that, the landlord needs to ensure that they have a sound accounting process that checks the tenant in that payment cycle. The landlord does not need or want an unpaid account and fines applied thereto.
  11. When the property market is active, the pre-lease market on new industrial property construction is quite strong. It is the timing of the release of newer industrial projects that needs to be carefully managed.
  12. Owner occupation is an element of industrial property performance that moves in cycles. Reading, developing and selling into that property market can be lucrative. This also says that the owner occupiers of industrial property will also sell out of their owned property. Real estate agents can tap into the major businesses to capture this source of new industrial property listings.
  13. When the property market is ‘strong’ the yields achieved on well positioned industrial property at sale time are usually attractive for the seller. This does say that care must be exercised in having good tenants, great leases, great location, and a well maintained property.
  14. Buyers of industrial property come from two sources. That is the investor market and the owner occupiers. This provides versatility in property disposal if one market segment is slower.
  15. Corporate investors will move property in and out of the balance sheet as the company changes and repositions itself for business advantage. Monitoring the media for such changes will give investors a source of opportunity. The process of ‘sale and lease back’ is common in industrial property.
  16. Ample car parking for staff and customers
  17. Good loading and turning areas for trucks
  18. Functional office areas that support the warehouse operation
  19. Generous warehouse height and entry points for trucks and storage
  20. Security for the premises
  21. Access to quality business communication systems including telephone, data, internet, and mobile communications
  22. Good signage at the front of the property that gives the business a clear identity
  23. Proximity to services such as roads, transport, water, gas, electricity, and other industrial tenants.

These elements are the most common that we see in successful industrial property. Whether you be a real estate agent, a property investor, or a business needing a building to occupy, you can start with this basic list and add your special criteria to formulate the profile of a good industrial property in your area.

Auto Finance – The Value of a Warranty

When buying or leasing any vehicle, either new or used, there will be or at least should be some type of warranty, which can either be a manufacturer’s warranty and/or a dealership warranty all of which can vary considerably in terms of what they offer and their terms and conditions.

Many people simply assume that a warranty covers everything they need it to, in the same way that many people assume that any type of auto or home insurance will simply look after them if they have any problems. Sadly this is not the case.

A warranty is effectively an insurance policy on certain mechanical issues relation to the car, and there can be significant costs involved if there is a misunderstanding or confusion about what the warranty covers or doesn’t.

It is certainly fair to say that a manufacturer’s warranty, is designed to provide major protection against any type of mechanical breakdown or defect for a fixed period of time. There may be certain exclusions which should be noted and replacement cost estimated if need be. It should also be noted that there will be certain conditions placed upon the warranty in terms of servicing and maintenance plans.

This is normally fairly straightforward in one sense, in that it normally stipulates that all servicing and maintenance work to be done by an authorised dealer, and that official manufacturers parts should be used more work. Any authorised dealer is likely to do this as a matter of course. Of course there are costs involved in this as it rules out any cheaper option or the individual doing the work themselves.

There may be other costs involved in a warranty, depending on whether the warranty will include any breakdown insurance or not, and any additional costs involved in any type of accident or malfunction of the car.

A manufacturer’s warranty will be for a fixed number of years, and should normally be transferable within that period if the vehicle is sold on or traded in for another one. In addition, a dealer may well offer some type of extended warranty, especially if the time left on the original manufacturer’s warranty is limited. Extended warranties of all types need to be examined very carefully as whilst they can seem quite attractive, they can actually end up being quite costly and not really that effective in terms of what they offer.

If an individual is leasing or buying a new vehicle then come the full manufacturers warranty. There may well be room for negotiation with the dealership for the costs involved in the fixed servicing and maintenance plans that are likely to be offered as well. The value of these plans as well as the value of a warranty is not simply that they just offer a fixed price, but they also offer a degree of security and reassurance in terms of the individual knowing what these costs are going to be in the long-term, it provides real peace of mind.