Hey. What type of commercial should I buy?

retail
office
industrial

What do you guys think??? Thanks!

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Peter,

Buy the Gap in the Market. By the Gap I mean you're going to have to do your homework to find out what's missing in the area that you're investing in. Example, in a town the I work in the Gaps in the market are Multi-family and Spec warehouses 50,000 sq ft. There just aren't any available. The multi family you need to find out how many there are, the vacancy rates, the last one built, the sizes, where in the community would it best fit. This would be more along the lines of development. You're area will determine the Gap in the market.

Dave

Hi Peter

I presume you are currently residing in Hong Kong, rite? I had been to Hong Kong once, quite some years back. Found that ground floor shops could be quite a good investment there. Here in Malaysia, ground floor shops especially in established area are normally highly sought. Capital appreciation of this type of properties could be quite substantial in a short span of time.

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Yeah in HK ground-floor shops are VERY VERY expensive. Their rent is also very costly, exceeding tens of thousands even hundreds of thousands of USD per month...

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Metternich

depends on your goals- present income, or some kind of development play.
for present income:
1) you can buy a single credit-tenant type property and enjoy 7-8%+ returns (esp if you buy US with your appreciating HK dollars.
2) you could buy multi tenant medical office or industrial, and enjoy 8-10% returns

for development or higher risk-returns:
1) you can buy a multi-tenant property with short term tenants paying less than market rent, because you believe you could re-tenant at market rents.
2) you can buy property with room for expansion, say a retail or hotel with excess land. build it out, using the existing property income to subsidize development costs. then you have created much additional value, and can sell or (in US ) do a tax deferred exchange.

Whatever has the best yield relative to risk. Cap rates can be deceiving because they are an oversimplified measure of the return and don't account for risk. I have found that non-anchored strip retail are often better priced than office or industrial.

That's interesting, I thought office and industrial were often better priced, but I will look into non-anchored strip retail a little more now.