I think the time has come to buy commercial property. And almost nobody agrees with me.
Hooray! The fewer buyers now, the merrier my eventual returns!
Commercial property is a core asset class. Yet most private investors only consider buying property after a long boom – when the fund industry is crowing about years of double digit gains, when their house’s value could pay off a small island nation’s national debt, and when they can’t even find their office because of all the new developments on the way to work.
Property has bond-like qualities, in that it represents a solid asset that produces an income via rents, where the yield rises as the price falls and vice-versa (provided the rental income doesn’t fall, of course).
Property also offers some of the rewards and risks of equities:
- The opportunity to make long-term capital gains
- The potential for income to rise over time, ahead of inflation
Bricks-and-mortar property offers some diversification away from equities.
It is also theoretically simple for experts to value, consisting of physical assets with a quantifiable replacement cost, compared with the murky world of equities, although this certainly doesn’t make property immune from wild fluctuations in value, as seen between 2006 and 2009.
While the expected rewards will be lower than with equities, on balance these traits make commercial property a core asset class in my book. It is particularly attractive to anyone seeking income.
A few people over the past 18 months have shaken their heads sadly when I’ve said I’ve been buying shares during the bear market.
You might think they were proven right when I was buying in early 2008.
Or you might think I proved them wrong when I was bought at the bottom in March 2009.
Actually, I don’t think either view is right: it’s all hindsight speaking. Timing market direction to pick the exact bottom is near to impossible, which was why I bought throughout the slump.
But I’ve also realized more recently that I’ve got a fundamentally different view on where the stock market is compared with most CNBC pundits, fund managers, and Internet share traders.
Some interesting financial and investing posts I ran across this week, plus a few decent articles from the newspapers.
I have been run off my feet recently, and unfortunately my $1 $2-a-day blogging habit has suffered as a result.
Unfortunate for me, I mean, because I love writing this blog.
(I know a few of you do enjoy regular updates, as you’ve been kind enough to tell me so via email. And we’re now up to 300 subscribers!)
But I do need to find a way to make blogging less time-consuming or, preferably, better paid, as the 10-20 hours a week I spend on Monevator is becoming unsustainable.
Some friends urge me to get more personal and to write shorter, more hands-on posts, with a weekly longer one to provide some meat. I may well explore this route in future, although I hope it doesn’t put off you loyal readers and subscribers!
For now though, I’m not going to finish a commercial property post I’ve been writing in time for tomorrow, so it’s going to have to wait until next week.
Instead here’s a few existing Monevator posts that even regulars might not have noticed before:
- Do you run a tight ship, or are you just a tightwad?
- Seven reasons why you should NOT start your own business
- Who is your Star Wars money hero?
- How Andy Warhol caused the property boom and bust
- Earn more money by learning from recent immigrants.
I hope you find something to enjoy, and do come back next week!
