The purchasing process unveiled - Property Inc

[ Podcast Transcription ]

Inside Commercial Property with Reef Investing. Australia’s largest and most comprehensive podcast covering all things commercial investing. G’day, Phil Tarrant, co host of Inside Commercial Property. Hope you’re well, uh, joined in studio. Mail wash here, we still haven’t been able to get together. Scott O’Neill of Reefing Investing.

How are you going? Very good, mate. Back into the, uh, new year, ready for another big year of property. There we are, commercial property, absolutely. And, uh, I reckon maybe by next month, we should be able to do this in the studio together. It’s much easier pointing at bits of paper and stuff and, and sort of flicking stuff across the table when we’re sort of chatting through properties in person.

It’s a little bit harder when we’re doing it over the marbles, that is the Zoom. Exactly. And they’re hopefully talking about this Omicron wave peaking of sorts. So, uh, Yeah, hopefully another month will be a better sign for all that. But that’s the main reason we’re sort of hanging away from the office for another month, just to, just to sort of not expose everyone.

And, you know, as a business, you want to kind of keep your distance while you can, and, you know, to the convenient holiday is still, you know, pretty close to us. Yeah. Yeah. I think that’s what most, most people are doing. We, we sort of make sense. Uh, you know, if I had to do a sort of snap poll of people in our organization, I reckon at least 50 percent of people now probably had the virus in some.

you know, some way or impacted by whether or not they had it or whether they’re locked down. So it’s whipped through and yeah, it would appear that we’re sort of at the peak now. Numbers seem to be coming down in terms of cases, whether that’s because they’re not getting report or otherwise, but, uh, it is a normalization of the COVID virus and you know, it’s, it’s always going to be there.

It’s just going to be how we view it moving forward is going to be how we approach it. Let’s not make this a COVID podcast, let’s make this a commercial property podcast. This is now our, I guess, our third year, 2020, 2021, 2022. Wow. I know it’s a part of the furniture now in the podcast space. It’s, uh, it’s really, uh, been a quick few years, but it’s really just, it started with COVID.

And, uh, yeah, well, I think we’ve explored every little angle of how that’s impacted the commercial markets and yeah, broken down the headlines. It’s kind of been a bit more sensible than some of the extreme predictions that are always coming out and I think touch wood, we’ve been pretty accurate with it so far.

So, yeah, I think it’s been good. It’s been good to be part of it. Yeah, it is. It’s really enjoyed it. Um, you know, I learn every time I catch up with Scott and if you just found us, welcome to Inside Commercial Property. Um, Scott O’Neill is, uh, I guess a buyers agent, property strategist. Who, um, specifically operates inside a resi anymore, do you?

It’s, it’s largely commercial stuff as a sort of, uh, rethink investing. Yeah, look, we, and that’s out of choice. Like I think I’ve mentioned a few times in the past, we were doing a lot of resi back in the day, like to the sum of, you know, 30, 40, 50 properties a month. It was a very good part of our business, but, but we’ve, cause we’re numbers driven and we’re looking for cashflow.

Our goal is to help people build passive income. So it just made more sense to go this direction and we’ve gone, yeah, basically a hundred percent this direction. And I don’t think we’ll ever go back because it’s harder to get it right. We’ve got specialist knowledge in this space. And look, for me, it’s more enjoyable.

I find doing due diligence on a commercial property, it’s new every day. With residential, it’s, it is repetitive. And, um, I’ve been running this business now seven, eight years. So that’s long in the buyer’s agent space. And there’s, there’s some guys that have done it longer, but most entrants have come in the last two, three years.

So I feel like we’re a bit different than that. I guess commercial keeps it fresh for me and my staff. Well, that’s the engineer in you, Scott. That’s it, mate. You’re one of these sort of, uh, slide rule type bean counter type people, aren’t you? That’s a compliment, by the way. Yeah, I definitely don’t like chugging four bedroom houses talking about the colours of walls every day.

That’s for sure. What sort of engineer were you, again? Uh, civil construction. So main role was building railways and, uh, specifically the utilities under railways and, uh, you know, all the overhead stanchions and stuff like that. So basically it was all about designing, you know, the power supplies, you know, making sure their, uh, tractors don’t hit them during the day, all that kind of stuff when you’re digging it up.

So it was a very. Very granular type job, like you don’t just sit back and look at the map of a big rail line and build it. You’re actually looking at very small portions of it. And yeah, it’s very specific work. And, and yeah, moved out of that to, uh, then end up managing mines and supplying the materials.

Like, so all the ballast, the sand for concrete, that was more enjoyable for me. That was, um, companies, wholesome. Adelaide, Brighton, that makes cement and um, that was more business orientated and that was kind of the real intro to commercial property because we’re managing the leases on concrete plants all over the country and I could see these 10, 15 year leases across the country and so these little guys owning small Properties in regional areas are getting tens of thousands a month for this lease.

So that’s the type of property you want to own. You want the concrete plant. You don’t want the little fibro house down the road next to it. You know, it’s a different beast. So life after fluoro then, mate. Um, imagine you probably used to wear a bit of fluoro with a bit of wide brim hat. You miss it? Steel cap boots every day.

Yeah. Yeah. The frost in the morning and the hot days. No, look, I, I don’t miss it to be honest. So I love this and I don’t think I could be capable of working for someone again. I think I’d just. Unemployable mates. I’d be unemployable. Yeah. Unfortunately, I’d probably just. Try start something different and start again, whatever that is.

Well, anyway, but now you should operate inside a commercial property, helping Australian buyers buy commercial. I guess your client base also, they’re probably Australians, but they might not necessarily be in Australia. You’ve got a lot of international guys. A lot lately. Yeah. So I don’t know what it is, but we’ve got huge amounts of Singaporeans and Hong Kong residents.

They’re not expats. Some, some are, some aren’t, but yeah, look, the, the yields, I was talking to a guy in Hong Kong this morning. So he’s buying retail in Hong Kong at 2. 5 percent net yields and they’re getting smashed by COVID. So that, that like, Australia looks really attractive compared to that. Like we’re getting.

Double, triple that yield. And I think our risk for retail is lower than theirs because of supply and because they’re, you know, it’s all, it’s a different beast over there. And I believe their lending rules are tougher. Yeah. Look, Australia is an emerging country to them as well. So I guess that’s why there’s a lot of people looking at it.

Interestingly, as well as the restrictions for foreigners to buy commercial are less restrictive than houses as well. So. I guess there’s more openings for them in that department. And, um, and big companies like big Korean super funds and all that kind of stuff that are looking at Australia to invest in as well.

So that trend will continue throughout 2022 and beyond, and it’s going to be another contributor of growth. No doubt. Yeah, absolutely. And what they probably attracted you as part of that. you know, opportunity there. Yes, the returns may be different than what they have in their, their own sort of domiciled country.

You can get much better net yields here in Australia, but there’s also from a sort of political standpoint as well, the sort of the security here in Australia, the continuity of our economic and government system, you know, for, You know, Korea, for example, um, you know, parking some of the wealth outside of Korea is probably not a bad idea.

Should the proverbial happen, you better remember Korea is still essentially at war with North Korea and at any given time that can kick off. Uh, it’s been some time since the fifties and the Korean war, but there is still that sort of undertone of, uh, political stability there. Uh, same again in, in Hong Kong, you know, with the handover, who knows what’s going to happen.

We saw through COVID the government there. Under sort of China’s influence trying to change the way in which stuff’s getting done and um, that therefore probably, you know, makes that less attractive place to park and invest your money. And Australia is seen to be a nice place to do that. And that’s definitely in the commercial space.

Yeah. And like on your notes as well, like I’d love to speak to someone or even get a guest, someone who sort of covers a lot of these areas, like whether they’re a, I don’t know, a banker that deals with loans in these countries or of something of the sort, cause it’d be really good to drill down on the differences because.

That is understanding the landscape as well. Like if you can understand what other countries are lending, which may influence Australia down the track, whether it’s more demand from us or future policies that could come to our shores. There’s, yeah, that, that would be quite interesting for me as an investor as well.

Yeah. We’ll get that teed up. Um, but you know, as a investor in commercial property here in Australia, it just means that the competition for these properties, um, it’s just not domestic, it’s also international and the purpose of this podcast. You know, again, welcome to those who’ve just found us. We’re not talking about buying, you know, commercial 40, 50 story commercial assets here.

We’re sort of, we’re not really talking at the institutional level and maybe that’s where a lot of sort of, um, you know, Korean superfund will probably be dabbling in, in commercial powers rather than, or more expensive assets, rather than, you know, more commodity based assets. And by that, we’re talking about this sort of stuff that Australians, most mum and dad Australians invest in, you know, retail shops, You know, strata offices, industrial, anywhere sort of between the million bucks or five hundred grand, depending where you are to about 10 ish.

Right. That’s our focus for this podcast. Isn’t it Scott? Yeah, exactly. And that’s 99 percent of everyday investors. Like very, very rarely do people go over that range. And like, we’ve, we’ve brought that in previous podcasts. They might be just random business owners or someone that’s inherited a huge amount from someone like, but they’re, they’re not.

They’re not common people. Most people will be refinancing their house because they’ve made a a million or two of equity or, or less. And then they leverage up on that to buy a property. And and that sort of gets you into that one to three to 5 million type price points. And that’s where a lot of the best quality stuff is beyond that.

You’re just dealing with bigger tenants, larger freehold land components. And, um, yeah, there’s, there’s very good assets in all these ranges. They’re just. It’s harder to find the cheaper they are. Thank you. Yeah, absolutely. Hence the reason why I’ve, um, commissioned, uh, you guys, uh, over Reithing and Investing to find me a commercial asset inside of my super fund.

We spoke about this a couple of podcasts ago saying that, uh, I am now officially a client of Reithing Investing and I’ve got a particular brief for you guys to go and find me a commercial asset inside of my super fund and rather than sort of just doing it between myself and you, we thought we’d use this as a, a real life, uh, case study.

Of how I, you know, about buying commercial property. I’ve got a considerably large residential portfolio, which sort of sits across a number of different trusts. And if you tune into the Smart Property Investment Show, you may be familiar with some of this as part of it is, uh, how I invest with a Smart Property Investment with my business partner, Alex Whitlock.

We share that portfolio, how we’ve gone about doing it. That’s a portfolio of 17 properties, 18 different sort of income producing assets in it, which is. I wouldn’t say a standard residential portfolio. It’s probably a larger residential portfolio, but I’ll also invest in, in other ways as well. Uh, personally in other sort of ways, uh, a bit of international property there as well in UK.

So that’s the stuff I don’t necessarily talk about on the Smart Print Investment Show. Um, but, um, I don’t have any commercial assets in my portfolio. I’m looking for some good cashflow and capital growth play. I have a self managed super fund of which I invest in shares in. Uh, so I’m going to, uh, Dovetail in some commercial assets into it.

One, two, three, who knows, uh, depends on how good Scott and his team isn’t finding me the right asset to help me continue to grow it. I do with a smirk on my face. So that’s where we are with it. Uh, I’ve signed the paperwork. So like anyone else that uses Reithing Investing, I’ve signed the paperwork. I’ve filled in some information around a brief of what I’m looking for to help these guys understand where I’m going.

And then Christmas happened and everything stopped. And now we’re back from the Christmas break and we’re back into it. And Scott’s presented three properties, which he thinks fills my brief. So I thought rather than just doing it on the phone, me and him would just do this on air as I sort of question around these things, three different properties, one in WA in Perth, one in Queensland, and then one in Newcastle.

And I don’t want to give too much away because I haven’t bought these yet or any of them. So I don’t want anyone else. coming in underneath me and Nick and Niece. So, uh, I’m going to be vague enough so no one knows where they are, but detailed enough so people can get an understanding of them. I’m going to call it Perth Chemist, uh, Trade Coast Warehouse and sort of Newcastle Showroom Warehouses.

We’ll frame these. So, let’s kick it off. Um, Perth Chemist, why do you reckon this place is good? All right. So, It’s a major chain. So this particular chemist has hundreds of stores. They’re all over the place. You’ve got a long lease. So this one is, it’s got about six years left on the current lease. So, um, there’s a lot of security in this, this tenant we’ve checked has been paying in full from day one of COVID.

And then Prior to that, they’ve been in this location for about 15 years. So it’s a set and forgetter. If you’ve ever seen one, these guys are locked in long term, they’ve got an expensive fit out. It’s slightly over your specified budget. So that was probably my biggest reluctance to send it to you in the initial spot.

Cause this, this one was sort of, uh, around the two mil mark and you were mentioning, uh, 1. 5 was ideal. So. It’s over two lots as well. So the, I guess the long term options with this is you could split it up, rent it as two different shops. However, if there was one floor I could pick with this one, if you did lose that blue chip tenant and ended up with two smaller, less well known tenants, you’re probably going to, uh, you know, you’d need a higher yield to justify that same situation.

So. The value added in this one is, is not great if you lost a tenant to replace it. So you need this tenant to stay long term. But having said that the rents are, I’d probably say on the low side, like we’re talking like the average rent in the area is probably around 420 a square meter. This, these, this is renting for about 380.

So there’s a little bit of upside in the rent. The reason the rent’s low is just legacy. This is the increases they’ve been on per annum. And now like it’s got fixed increases of 4%. So I think if anything, it will bring it to market in time. And, uh, I guess it’s just, it’s just a classic set and forget a good tenant behind it.

You’re in the right industry too. There’s nothing negative you can really think about with a major chemist other than losing it as a tenant. And, um, because it’s in a really good part of town. You know, like it’s a middle ring suburb of Perth to like this, this type of asset will, it’ll tick away in the background.

It’s collecting about 120 K in rent as well. So it’s around that 6 percent net return. So that stacks up in terms of the yields for the area. Like we’re seeing most good quality assets through, you know, we bring the auction houses to, uh, to question a lot. And, uh, you’d probably if, cause this is an off market, silent deal.

You’d probably be able to flick this at an auction at, at a 5 percent flat rate. So there’s, there is about a 20 percent uplift if you just drilled it through a, you know, a mainstream auction campaign, but we’ve got this silent listing. So I guess that’s the upside, but that’s more of a, I don’t really view that as a, I guess, an actionable You know, outcome, you don’t want to buy this to flip it because this is something you want to hold and pass on to your kids type of thing.

That’s how I view all good quality commercial and, you know, just, just buying well as just helping us get it at the right yield. Yeah. So to your point, it’s a generational asset. I’m putting this on the super fund as well. That’s what lends itself to that when my kids are old enough, they can just drive into that and start paying their own money into it as well.

when they start at McDonald’s, uh, as early as they possibly can. To give you some sense of this property, you know, you can just imagine what it looks like. It’s on the road, but it’s right near a big shopping center with the Coles and Woolworths and all that sort of thing. Looking at the numbers, seems to make sense.

Uh, Scott, so is it on two different titles that are just scooting together? So you’re buying two properties essentially? Yeah, essentially it’s two shop fronts that they’ve, um, knocked down the internal wall, made a bigger shop front. So. It would be classed as retail but it’s obviously got the allied medical in it.

So the types of tenants you would replace this with would be another type of similar business. You might get, we’d have to check the zoning and the due diligence phase but there might be some allowance for Foods or anything to do with, like, there’s plenty of food related businesses up and down the road, like you’ve got Subway close to it, you’ve got, um, all the franchises around that area.

So it’s just a classic strip shop area and, um, high foot traffic by, um, road traffic as well. Yeah, look, if you lost this tenant, you’d end up with some type of either food related, retail related, um, another allied medical type property. And yeah, this, this is the type of asset we, we like, cause it does have releasing options.

Like you’re not stuck if this tenant goes, however, you’ve got a good tenant to start. It’s, it’s not the type of property we’d want to. Like, I can’t imagine his tenant would give up that. Like you, something. drastic would need to happen for them to want to give up that location. Yeah. No, exactly. And they’ve been there long term and yeah, that’s why I don’t think we’re like, and they’ve been paying in full, like it’s the industry’s going strong as well.

And, but you know, what part of the due diligence would be. You know, like even you may remember, we, we interviewed a guy that ran some, uh, chemists, you know, and try and get some backstories. And, and this is the great part of my job. Like there’s always an industry where I have a client that’s worked in and we can try and get some more get the ground truth, get the real world scenario.

But this particular chemist, you know, Everyone would know the brand. Uh, and it sounds like a good asset. Two million bucks, so probably a little bit outside. Uh, two million bucks, let’s say hypothetical, how much cash money will I need to get into that? Um, so in this spreadsheet, we’ve got this for you. So we’ve got, now I’ve run it off a 70 percent debt, which is.

Definitely possible. So your deposit you need is 30%. So that’s 600, 000 call it now the stamp duty on it is going to be about 95, 000 and then you’ve got a valuation cost, which is probably going to be in the order of about two and a half thousand solicitors. They generally start with about a three or 4000 amount.

And then on top of that, there’s a lease review. That might be another, you know, 500 as well. And then the disbursement. So you might be allowing five and a half, six grand really roughly for a transaction of this size. Now, cheaper ones, like if you’re buying a 500 grand property, you would expect to pay a lawyer around four, four and a half for a 10 million property.

You’re probably paying them over 10, 12 grand. So like the, the price goes up, I guess the complex, you know, the complex nature of the leases or the amount of leases, all that type of stuff. So yeah, you’d need to probably, um, Yeah, I’d say 750 with your buffer in place. And then that’s going to give you a cashflow less your interest.

So it’s collecting, you may remember we said about 120. Now your mortgage on that is going to be about 41, 000, 42, 000. Yep. And, uh, yeah, you’re going to be left with somewhere around 70, 000, 75, 000 clear. That’s after mortgage, after outgoings, after all your costs. So it’s a pretty good… So it’s going to take you 10 years to get your money back at purchase, you know, your initial outlay and then everything else on top of that is just gravy, right?

Yeah. And, and this is, if you actually look at how, because this had a 4 percent increase in it, and this is what I love about commercial sometimes, you can see what rent you’re going to get in 5, 10 years. So if the rent, net rent year one is 72, 000, Year 2, it’s up to 76, 900. Year 3, it’s up to 84, 000. Year 5, you’re clearing 100, 000 on the dot.

So, it’s gone from 72, 000 to 100, 000 clear through those 4 percent increases, assuming the interest rate has remained the same. So, so how long would I have to make a call on this particular property? It’s like a pocket list of you, like no one else has got it, so. Yeah. So look, we generally need to act within 48 hours to stop this going to the market either.

Like there’s always a different story. And we, we like to, I guess, let you know, like sometimes when we buy on market, we’ve got to move quicker. Sometimes agents are literally using us to test the waters. We’ve been, we’ve been owner. So we have a verbal acceptance on this one. So we will secure this one.

Yep. However. Owners change their mind once they got contracts in front of them. So there’s a lot of rework and look, all your resi buyers agents would know this as well. Like it’s the same, like we’re dealing with owners and agents and, um, losing deals as part of what we are used to. So, but we do really up the percentage of it.

Like, so if you’re just an individual guy trying to buy a one or 2 million commercial property in this market, you’re going to find it very challenging. Like you’ll be lucky to get one in 10, if you’re going hard at it. We like to probably, you know, we’ll be getting 50, 60 percent of what we go for if it’s on market, just because we’ve got, you know, hopefully connections to this agent somehow, or we know the process.

So we, we still lose a lot, but yeah, 48 hours generally means we can do what we’ve got to do. And that’s it. It’s 2 million bucks. There’s no North or South on that. It’s just. That is what it is. In this case. Yeah. So some of them are still in negotiations. Like we just want to quickly grab it because we know it is, but we’ve already sounded them out on price.

Like I’m not in the business of just writing properties up for the sake of it. Like there’s probably a thousand plus words in this email. That’s a big waste of time if we don’t have some certainty on the property. So. Yeah. So you, you like this joint, would you buy it? I would, if this was your budget, I like it because it’s, it’s a set and forgetter.

Um, if there was one negative, it was just, you’re buying it for the tenant and that’s not a bad thing. Um, look, it’s a hard place. The place ain’t going to fall down, is it? You know, you know what I mean? Like as a building thing and what’s the sort of height levels on that? If you’re going to develop it, could you, could you, can you go up a level?

Can you go up a couple of levels? What’s the? Good question. And this is something we’ve actually got one of our guys in our due diligence team who has extensive experience with large developers. So we’ll look into potential development upsides with it. So at this early stage. It’s more about just securing it for a 21 or 28 day due diligence period.

And then we, then we can call it, you’ll work out all that stuff because all the chemists are, we, you know, we will actually interview the tenant and see if there’s any bad smells we can pick up there. And yeah. So, so part of the strategy then is to, you’ve got this window to say, yes, you signed the docs, but you can pull out of it within 21 days.

Right. Correct. And there’s no, do you lose your deposit? How’s it work? No, it’s all refundable. So the only money you would lose. Is if you spent money on a building report, so something like this might be five, 600. So you generally, you know, if you’re going to proceed or not, like once we’re under contract, like 95 percent of them go through, like the types of reasons we’ve crashed on deals might be sometimes the owners don’t give us more time on finance because they get frustrated, but we try and manage that process the best we can.

Sometimes we see the tenant hasn’t been paying on time when we thought they were, but the good thing is agents will tell us. up front because they know we’re going to check this if there’s a good payment history. So we don’t really run into that issue because we’re dealing with, I think, pretty, pretty honest agents who tell us up front because they know it’s going to come out and, you know, they’ll tell us up front if there’s been problems and then we can take that into account.

Bad building reports is something that happens a lot less than residential. Again, my residential days, there was A lot of deals would crash because there’s settlement cracking or there’s a, you know, a bad leak through the bathroom wall and the owner’s just being difficult. And maybe the deal was a little bit marginal to start with.

So that extra 20 grand costs is not worth the hassle. Commercial, you’re dealing with better quality buildings in general. So. And it’s largely not as complicated. I don’t know if that’s fair, but there’s less moving parts usually to a commercial asset. It’s correct. Yeah, it’s a good assumption. Now, obviously there are so many cases like shopping centers and stuff where there are, that can be a warrant of, uh, you know, roof cavities and stuff like that.

But, but generally even those are built well because you know, they have to be there. It’s a high cost to build it and they’ll get a high cost for sale as well because it’s all factored in. So good quality is, it’s got to be up there. Okay. This sounds pretty good. Um, but no doubt at all. Deals you’re putting in front of me will be good.

The challenge is going to be working out which one to do. And I guess the, um, you know, for me trying to work out how to synthesize these, these deals in a way in which I can be decisive in my decision making budget is one thing that’s a clear thing. Locations. Another thing like this year, I’ll go Perth ago.

That’s great. I reckon I’ve been to Perth. Twice in the last five years. Yeah. I’m not going to be going past at any point in time. Does it really matter would be the question. It’s just a, it’s just an asset, you know, and how do I feel about retail at the moment? I’m not too sure. Sort of high street based stuff.

Yeah, it’s okay. In the right areas. Um, but anyway, they’re the sort of stuff I’ve got to consider what else should really be forming my decision making Scott. I don’t want to overcomplicate it. Right. Cause no deal is going to be perfect. No, you said it perfectly. You’ve got your concerns. So you just need to consider those and look just, you know, you can run and buy me examples of chatting.

Cause like we talked to all the leasing managers. That’s a big part of what we do. Perth itself is coming into a strong phase. Like ever since the markets between probably 2012 to 2000. Even 19 were quite weak over there. So basically there was yields are very high that, you know, buyers weren’t just throwing themselves at properties.

That’s changed now. Now I think the last six months has been the best six months for Perth in a very, very long time. The growth is happening before our eyes. We’re seeing yields compress. Yeah, almost quicker than we can keep up quicker than valuers can keep up as well. So that’s something to consider.

Like if they use comparable sales from 12 months ago, all of a sudden the price might be 10 percent higher. So that is a problem. We run into a market like Perth, one that’s been flat for so long, but it’s now. On the way up. So yeah, that’s a consideration. So if that was at the top end of your budget, and maybe because it’s a good quality tenant that you know, you never know that might sway it to me, though, I’ve always got, and I always have done, and maybe it’s just an ill informed bias that I have with Perth, but It just feels a bit hard, you know, and, and you think of Perth, uh, which had a huge, huge growth and then just flat or backwards for a long time.

You know, it is a, largely it’s a, and a lot of people from Perth probably won’t like, Western Australia probably won’t like me saying this, but it is a one economy town, right? Everything is a result of the stuff they dig out of the ground in Western Australia. Everything is interconnected with that. And going back to sort of security concerns and geopolitics, you know, If things go south and the security environment in the Indo Pacific changes, well that’s essentially Perth gone, right?

If it’s not selling its stuff, particularly to one customer, that changes the framework of that whole state. Number two, the current government in place, a lot of people sort of singing the praises of the way in which Western Australia has navigated COVID 19. The rest of Australia is sort of looking towards how Western Australia has navigated COVID 19.

And they’re hard to do business with. It just goes to show Western Australia is hard to do business with. How that’s got to change in time, I don’t know. There’s just a lot of what ish to me. Maybe that’s ill informed bias. I’m happy for anyone to argue with the other way. I’m okay with it. But for me, I just go, Oh, maybe it should be too hard.

Like maybe that’s, that’s the stuff that just makes it too hard. I don’t know. Maybe I’m an idiot. Yeah, look, look, the only counter argument to that is it’s early on in the growth cycle. So what a lot of what you said is correct and, um, but we are buying at quite a low point. So like, for instance, Brisbane, Brisbane is, it’s expensive now, you know, Brisbane is, is really caught up with Sydney and Melbourne in the last 12 months.

It’s the closest to its, you know, population size. Perth and Brisbane are quite close to each other. And, you know, there, there’s a lot of diversity to Perth that it still has, but if you can pick it up at the right value, again, it all comes back to the numbers. Does it stack up that individual investment?

We’ll give you a consistent return with growth and not all assets will do that, but on the ground, I’ve heard that, you know, the, even the office markets had more activity in the last few months than it has in the last year. So that something’s happening there, which is good. Something’s going on, you know, just to finish the point on, on this Perth chemist, if you showed me this place, Identical with an hour of Sydney, I’d probably snap it off your hands, right?

You know, and you know what the one difference would be? The price. Instead of the 6 percent yield, you’d probably be at 4, 3. 5, 4%. So that’s the difference. It’s an interesting point, but there you go, right? Like not all assets are created equal. There’s so many different components of this. So anyway, that’s the Perth chemists.

I like the sound of it, whether or not my bias is, um, Uh, unrealistic. I don’t know. Uh, but you know, I’d like to think I’m reasonably informed. I’ve got to trust my instincts on. So that’s not a no buy by the way, uh, Scott, um, trade coast. So trade coast, let’s call this the trade coast, uh, in Brizzy, Queensland.

And for those of you, uh, who, you know, your geography, let’s put a big circle around the sort of airport, marine port, maritime port areas of Brisbane, essentially where most people arrive when they come to Queensland or Most stuff arrives when it comes to Queensland or exit. So give you some idea if you haven’t been around there, light industrial, heavy industrial, big logistics type stuff, uh, all around that particular area, some retail, but sort of industrial retail.

So this particular property you put in front of me, Scott, tell me about it. So this one is probably, I’d say closest to your brief because, um, I’ve been quite mindful. I want to show you assets that will favor growth as well. So we’re going a little bit sharper on the yields for quality. So this one’s a 5.

52 net yield, but we are talking quite literally the best location in Brisbane when it comes to Rental growth, re leasing. It’s right next to the airport. It’s right next to the marine port. You’re, you know, you’re, what is it? 6Ks, 7Ks from the CBD. So you’re right in the middle of everything right in this location.

You shoot onto the M1, which is that, you know, the big highway down to the Gold Coast and up north. It’s perfect for logistics. So you get those types of tenants in these areas. Goodman’s for instance, one of the largest industrial owners in the country. They own a huge amount in the suburbs. So you got, you got giants around you and um, and this property at 1.

45 million is it’s under your budget and it’s a classic warehouse with some office in it. So the tenant has been in business since the seventies. So they’ve been in this location for about five years and they’ve got a lease till 2025. So there’s a good lease covenant on it. The increases on this are 3%.

So that’s probably, you know, it’s fixed. So you’ve got the guaranteed fixed income, if anything, the rent’s slightly under on this one as well. So we’re talking 185 a square meter stuff around this for this size is probably around 200. So slightly under market, but, um, But there is a definitely upside because these markets are moving quite quick.

Uh, this one would release very easily. So the releasing equation on this would be probably lower risk as we would find. So I know it sounds a bit silly, but I wouldn’t even care about this tenant long term for it. It’s not what we’re buying this investment. Probably the biggest difference to the chemist, like we care for that chemist.

We want them to be there because a lot of the investment success will be attached to it, even though you could release that still. But this one, yeah, you just release it many times over. It’s just the tenants almost just someone to, it’s a side note in a way. Um, so yeah, it’s good yield, good area. The rents are growing at over 4 percent last year in the area as an average.

So the market is moving from a rental point of view. And, um, we buy a lot of high value stuff in this area too. So we’re like for our clients, we’re often dropping between five and 10 million on an individual asset in this area. And the yields there, uh, they’re all sub six as well because of the quality.

So investors demand those types of prices because, because of the security, I guess, and the, and the potential for growth. So it’s a good safe bet. This one. Yeah. And to your point, continuity of, uh, lease of it, just irrespective of the tenant, that sort of appeals to me. Uh, so is this, this is capital growth play.

Is this a buying at value play with upside to put a new tenant in there at market rate? What, what’s the game with this one? It’s a little bit of, uh, all of the above. So This is a cheaper property, of course, so it’s, you know, it’s 1. 45. So the, like, you’re collecting 80 grand rent on this. So minus your mortgage, 30 grand, I’ll call it 30, 500.

So you’re getting just under 50 grand clear. So. It’s a safe 50, 000 passive income. So yeah, nearly a thousand bucks a week for doing absolutely nothing other than own a property. It’s, it’s pretty handy and you’re not spending multiple millions of dollars to get that either. So it’s, um, it will grow. The rents are growing.

There is upside if this tenant left at the end of 2025, when the lease is up, you will probably have a market review and charge more rent for that. If you got a big, big name tenant, a bigger one, you’d. You would increase its value as well because the yield would drop for the, you know, the cap rate for this asset would, you know, push it, you know, push the value even higher.

So there’s, I guess there’s security and growth with this type of one. The building itself is around 10 years old, so there should be decent. Depreciation on offer. Uh, the other building was a little bit older as well, being in a established retail area. This one’s, yeah, it’s on, it’s a newer asset as well.

Any sort of upside on the building? Can you sort of tinker with it? Can you put more mezzanine in or anything? Or is it just is what it is? Well, I think, yeah, that’s something we’d have to explore more, but there is, it’s a two level building, so I don’t think you can increase the floor space already. It’s already done.

It’s probably more the square metre rates. You could get it up from that 185 a square metre, probably towards the 200, 210 a square metre. The upside is going to be in the market. Because we know this is moving quite quickly at the moment, it’s like buying an equivalent asset in, you know, around Botany Bay in Sydney, you know, it’s sort of that.

That’s a good lifelike comparison. I get that. You know, Botany’s gone nuts, by the way. If you bought it 10 years ago in Botany, you wouldn’t care about your little 5 percent upside back then, you would have got double your money because of the market going off its head. So. You know, we’ll never know how hard or, or strong something like this will go.

But on the coal phase, we’re seeing, uh, most leases growing at anywhere from three to 4% or the CPI, whatever the CPI is coming up. And on that CPI note as well, like, ’cause a lot of people ask me, oh, what happens if an interest rates rise? Like this is, you know, if this lease was CPI increase, I’d actually prefer it over the fixed 3% because, you know, CPI might be 5% next year.

Yeah. That means your rent’s grown up yield’s gone up. That means you’ve had capital growth. So CBI is kind of good for us commercial investors. Like, although there might be a point where interest rates are higher, you’re kind of benefiting at the front end through increased rents. So, you know, you need a bit of both.

Yeah. Okay. Um. I like the sound of it, you know, and you can stop by and check it out as well. I’m in Brisbane, but, uh, but there’s one of these things where largely these things should be set and forget. They’re not, it doesn’t really matter what it looks like as long as it has utility of a return investment.

You think about it, 50 grand in my back pocket every, or back into my super fund every year, that’s sort of, uh, is attractive. And if you’re buying at 1. 45 fastball, when’s the Olympics on? Scott, about 10 years from now now and 10 years away, is this thing going to be double in value by then? Well, yeah, I guess no one can really predict it, but like where, um, you know, I think, I think there’s room for that to happen.

Definitely because the yield is still good. The rents are quite reasonable. And if you just compare it to Sydney, which that’s sort of a bit of a measure, or any Brisbane investor will use to a degree, it is half price of the Sydney asset in equivalent asset, equivalent suburb, sorry. Okay. Uh, all right.

Final one, Scott, we’ll, we’ll just talk about this one. Let’s not give too much analyst interpretation around it. We can leave that for next time we get together, but I’m going to have to make a call on. Pull the trigger on one of these or none of them. It depends what’s going on. Uh, this, uh, Newcastle, uh, Newcastle, by the way, is a big metropolitan area now.

So if you think about the catch, all of that goes all the way down from, Oh, Donaldson Morissette in the South. through the north of, I guess, to Stockton, it’s pretty much as a river there that stops it. But, um, it’s a big geographic area now. So it is, it’s a Metro location. This particular property we’ll call it, um, the warehouse slash showroom is in one of the industrial areas, uh, of Newcastle, not smack bang in the middle of it.

It’s on the sort of outskirts of, tell me about it, mate. So this one is the cheapest. So we’re around a 1. 2, 1. 25 range. So this one is, again, it’s going to be off market, but we’re, we’re still negotiating this one. So I haven’t locked the price in. So there’s a bit of an asterisk on the price for that, but, um, we’re looking at.

a good quality trade related business in there. So they basically, um, you know, show tiles and flooring and all that kind of stuff in their showroom, which kind of doubles up as a warehouse storage area. So it comes with all the usual car parking. Um, the lease is three years, so it’s the shortest out of the lot.

It’s Newcastle itself is, it’s an extension of Sydney these days, as you know, like the yields and prices are quite high in this area. So New South Wales. I have a lot of clients come to me and say, yeah, I want New South Wales because they’re comfortable with it. And I don’t know what it is, but this, as soon as it’s got a New South Wales postcode on it, you pay more for it.

It’s just, it can be at the, you know, out, you know, in the Western New South Wales area. But if it was across the border in Queensland or even Victoria, uh, it would be cheaper. So there is a premium you pay for New South Wales assets, which a lot of the time I don’t think is justified, but. Our job is to pick, you know, the good ones, and this is sort of a five and a half, just under 6% type yield on it.

So the numbers still work. You’ve gotta remember most people are getting interest rates around 3%. Um, super funds are probably more like four, four point a half. So there’s a, there’s a good gap there for, you know, and obviously you’re gonna be putting about 30% cash down to purchase this. So. The numbers, they stack up, you’re well and truly positively geared again.

The only reason I probably would say this would be the least favorite out of my two is just because the budget is, is getting, it’s too far under your budget. So what that really eventuates to is you’re probably only going to clear a, it’s now a 40, 000. passive income from this because you’re not spending to your potential.

So although the yield is similar to the other two, uh, you’re just not getting the same volume of rent. So that’s going to come back in your net cashflow. And I know, you know, you’re a typical busy business person. You don’t want to be buying little properties. Regular, because it’s going to take a lot of time.

And especially with commercial, you, you want the bigger, better quality stuff because it gives you more rent. What you’re talking about there is, yeah, that’s like the utility of your money. Right. So what it is, so if I’ve got a certain budget and say that Perth chemist is probably at the top end, could I buy that?

Yeah. And then Newcastle one at the bottom end, but is there enough to buy two? Probably not. So, you know, if you buy this Newcastle one at the lower end of it, that means I’ve got this. Chunk of cash, which is giving me no utility. It’s just sitting in an account. Give me a tiny amount of interest. So I’ve got to deploy that somewhere.

So your point being, Scott, is that I should deploy all of it into one better asset rather than splitting that out and having one asset that’s giving me 40 grand a year and then just some cash sitting somewhere, which I need to Simon. Put more money into and there’s, there’s issues and tax complications with topping up my superfund with more cash because I’m not getting the benefits of it.

So therefore I lose utility that money. So these are all the, some of that’s an accounting question. Um, and we’ll get, we’ll get my account number. You can have a chat with us as well, Scott, but that’s what you’re getting to with that. I’m better off going, going the top end of the budget. Yeah, exactly. And, um, I guess that’s one of the main reasons how you decide properties like you’ll probably notice from this conversation today, we’re dealing with similar quality assets like we’re, we’re sifting through hundreds of properties to get to these few.

So by nature of that elimination model is they’re all the top are going to be all close to being. You know, comparable because they are the top of, you know, they’re the top 1 percent of what’s on the market. So deals are all going to look similar in, but for different reasons, but, um, that’s where your budget might be a big deciding factor of the direction you go.

And, uh, and maybe state if you’ve got a lot in one state or, uh, you know, Once you own a few commercial properties, you may start diversifying within commercial, like to get retail over industrial. So it’s very personal, personal, all this investing. And, uh, I guess that, you know, that that’s where, uh, you will always make the call for your situation.

We’ll just get the right ones in front of you to, to make that call. And the brief to you, Scott, I guess there’s two purposes here that the primary one, uh, to be fair is. That’s a really good investment for me inside of my super fund. That’s the, that’s the primary purpose that has a good return. So it’s actually topping up my super fund with positive income and also capital growth over time.

So at a point in time, if you want to look at these assets, uh, that money goes back in the super fund and then that’s income that I could live off, right? That’s the primary purpose. The secondary purpose of it. Which is interesting is to sort of create a story for people so they can actually go behind the scenes of a real life commercial purchase inside as a superfund because most of the time people, they just sort of theoretical examples and stuff.

So this is, this is real life. So the brief I gave to you was Scott. Let’s just choose something which most people who are investing in a super fund would be buying. So make sure that the example that we create is as wide as possible and as relevant as possible. So hopefully we’re capturing the sort of the middle bit of a bell curve here, you know, of the, the 20%, of people who were probably doing this, this is the sort of stuff that they’re going to be buying.

And that was sort of helped shape the brief. So rather than going super top end, I’ve gone, let’s aim here. So I would argue that this sort of stuff would probably be relevant to most of your, your client base. You know, my choice is going to be based on some of the, the specifics of what I’m trying to get out of this.

I think these are all really good assets to point around Newcastle at the bottom end of the budget, you know, 40 grand. Okay. That’s nice. What’s the total, total cash money to get into the Newcastle? Property. So you’re working off about 460 to 70 for that. So less cash, you can see the cash on cash returns are all about 10 to 15%.

Like, you know, if you invest, or this one’s just under 460, 000, you’re going to be collecting about 42 to 43, 000 income. So that’s cash flow clear. So you’re getting a cash flow cash on cash, you know, 9, 10%, in this case, but which is pretty good as an investment. And that’s, that’s the cash, okay. Back to you.

It’s not counting the actual, um, the growth of the asset itself. And if, if it grows, you’re talking, you know, you’re talking 20, 30, 40%. Like if it grows at a rate of 5%, you’re probably around 25%. It’s cash on cash. Um, if it grows 10 percent per annum, you’re, you’re up towards 35, 40 percent cash on cash. So. If it grows, it’s a very good, very good story as well.

And, and sorry, what was the total cash? I know the Perth Chemistry about 700. What was the total cash in for the Trade Coast Warehouse? Cash required for that one was about 540. And you reckon that’s going to put 50 into your back pocket. So again, 50 net. So there again, you’re sort of looking at sort of high nines, 10 percent return.

Okay. Some choices to make. Yeah. How fast, how fast you want me to move? I’ll have you 48 hours, mate, just like everyone else. Just, uh, no, I guess. Better go and speak to my mortgage broker, uh, Eva over at phinney. com. au. Better wait for a phone call. For sure. Yeah, just, just have a, have a chat. See what, uh, options they have because they might spit out different interest rates and maybe even a different leverage as well.

So that could, could influence the decision. Um. If you could buy at 70 or buy at 80, what would you, I’m talking about LBR, you reckon you want, you want 30 percent in just for, just for… Generally 30 percent because you’re going to get, especially in a super fund, you’ll probably get punished on the interest rate to go up to 80, 75, 80.

Go, go lower, get the best interest rate, but it’s within reason as well. Like if, if you didn’t have enough in your super and you, you were about to buy a much better property, like you pay the higher interest rate temporarily and then refinance later on if you have to, but yeah, yeah. That’s the game of finance you’ll work through.

Yeah. And you’ve got no concerns, evaluations of Resi it’s a bit hard at the moment. The purchase price versus what the bank bay is that there’s sometimes a bit of a discrepancy. Yeah. So I’ll give you an order, which are the most, so the one in the trade coast will have the least chance of coming in short, just because that market is, I guess it’s, it’s a little bit further up the growth cycle.

So there’s just a lot of comparable selling at net yields at 5 percent or under. So we’re buying at 5. 52. Yeah, there’s, there’s just so much to argue back at them. There is no real value attached to that tenant as well. So there’s, yeah, I guess the one that had the chemist in there, they might, if that were being really difficult, they might try and value it against other lesser tenants and then find something that was selling at 6.

5, even though we’re getting ours around 6. So that could come in short if they want to do, but I guess a lot of the time when we have a client’s property come in short on evaluation, we will then generally order another valuation and it’s like magic. They generally come in on the money. So two different valuers can be 10 percent apart on the same day.

It’s just part of life. You never know, they could be having a bad day. I’ve seen on Resi stuff I’ve bought where they’ve come in and they’re valued at X and they’ve gone for whatever reason. I think once I got one valued up on Christmas Eve, right. And it come in really low. And, uh, and all I did was sort of, um, there was some paint splatters on the concrete and maybe it was, uh, the screen door had a bit of a rip in it.

I just changed that and it come in like 40 grand more. So, you know, any, any given day, I’ll close this question, Scott, and you probably get it all the time. And it comes to the point of being a good investor. When you’re ready to buy, you’ve got to be decisive with this stuff. So if I go, Hey, these are a little good Scott, but yeah, I don’t think they’re that good.

I’ll wait till something better comes along. Is that going to be like waiting for Godot to channel my, uh, my, uh, first year, uh, literature at university. Are these as good as they get? Yeah. Look, as I said before, they’re all going to be within one or two or three or 5 percent quality. So there’s no, Unicorn out there.

That’s just going to blow your socks off compared to these. So you can go look online and that’s probably an exercise worth doing. If, if you’re going to get deep into the homework, just look online and see what 1. 5 gets you. And I know your investors will probably do that when, when they listen to this.

And you’ve probably not going to see this type of. Quality out there. You’re going to see stuff at much lower yields or weaker areas or much older buildings. Like these are all viable assets. They’re investment grade, depending on your budget, you’d buy all of them for different reasons. Um, I think, I think you just got to work out which one works best for you.

If you are indecisive and you can’t make a decision, Reject them. And we’ll go look in a month’s time and go through the process. You’re probably going to see slightly different versions of this. The other angle is if you said, Scott, I want much higher yield. That’s the other angle we could go down. I specifically want quality suburbs and tenants in this area and buildings.

We can definitely get higher yields if you want, but you’re going to sacrifice growth and probably a bit of a leasing risk to get your seven and 8 percent return. So. Yeah. Look, I think you’ve fulfilled the brief. So it comes down to me. And when does it get to a point where you just go, I don’t want to deal with Phil anymore.

I bring him all his assets. The guy’s too scared to make a decision. He’s now a headache client. And no doubt they exist where I take all your time, energy and effort. You put all the hard work into it. And I just go, nah, not right. Not right. Not right. When you just go, Phil, you’re too hard, mate. Does it happen?

It happens, but it’s almost not that blatant. What happens if, you know, let’s say we’ve sent 20 properties to a client. I’ll call them up and say, look, send me your exact criteria, because you’ve rejected everything the market’s got. And may like, sometimes they’ve had a personal change or they’re, you know, someone’s told them not to invest or the bank said no, or they found another asset.

Like, there’s always a million reasons why someone doesn’t buy. But, um, generally we’d just like to really home in on that criteria. And we’ll be in touch once that criteria is hit. I don’t have many unrealistic clients. I must admit, like maybe in the earlier days, I had someone that wanted a 10 percent yield in Sydney Harbour.

You know, they’re, they’re not really there. Like the buyers are educated now, especially the ones that, you know, maybe they listened to this podcast or whatnot. They, they are on the same page with the market generally. So. Yeah, it’s just working out their criteria and then that’s how we separate what properties go to what clients too.

Like you, I know what you want and that’s why these have gone to you, not someone who’s got a budget of half yours or double yours or like, it’s, these are for you for that specific brief. And the, and the more we can separate that, the guess the, the less chance that would happen, that circumstance you mentioned.

Okay. Cool. Well, super long. Podcast kicking off 2022, Scott, uh, we’re probably gone for about an hour 15 minutes. So if you still listen to us, thanks, thanks for sticking around. Uh, we’ll try and keep them short about that. That’s good. That’s a really good, um, and no doubt, like. That’s how a conversation would take place if you’re just chatting to a client over the telephone, right?

Yeah, that’s a big part of it. It’s not that different, is it? No, that’s exactly how they go. No different. It’s, yeah, we just talk about the assets. We’ll get into more detail if, um, if it requires it. But, uh, like I said, a lot of the extra due diligence will come in the due diligence period. So we’ve got another three weeks after this.

To talk To do the hard work. And then I’ve got to do the accelerator on, the key thing to this is, is finance, right? Um, deposits, okay, finance needed. So, uh, Eva, by the time this goes to air, uh, over at finney. com. au, finney mortgages, uh, we would have spoken. Hopefully we’ve got all this in place. So watch your space.

Uh, we’ll check back in, in a month’s time on inside commercial property. Uh, Scott, good to see you, mate. You too, mate. And we’ll, uh, hopefully get you into a property nice and soon, mate. Well, that’s the idea. You got room for other clients or, or you’ve got the whole team now looking after Phil Tarrant? Oh mate, you’ll, uh, no doubt be high maintenance, but we’re, we’re ready for you.

To be fair, most people who, who deal with me will go, uh, Uh, would I, am I easy? Um, yeah, easy, but working with me is, the challenges are just getting a hold of me sometimes. And, you know, that’s a me thing, but we’re not, we’re not, if I’m, if I make a decision, I’ll make a decision. Uh, I’ll go for it. But like everything sort of sorted out beforehand.

Right. Uh, that’s, that’s what it’s like working with me. Yeah, a fair client, a fair client, but there is room for other people. They can get in contact with you, right? Of course, yeah. So we’ve got our usual waiting list, but it’s, um, it’s all to do with the supply of the property. So, you know, we’ve got waiting lists for a reason to keep the quality.

So, you know, the market is, is moving, but there’s always good deals. So I guess you never want to rush in and buy the wrong asset. So, yeah. As a company, we, we have to maintain quality above all else, uh, beyond revenue. Um, and that means, yeah, we can get the results for our clients. Hopefully, um, it’ll be like you and I Phil, we do many commercial properties together.

It doesn’t just finish with one. So you’ve got to get the right assets that leap from you into the next one. And there’s a bit of a complex here. Maybe this is a question for the accountant. How many commercial properties do I want my Superfund, right? There’s only so much I can put into my Superfund in terms of contribution every year to make it make sense.

So, you know, it’s very hard to leverage the equity of a property inside of a Superfund. The only really way you can deploy that is through keeping it Superfund. So there is limitations to it. So You know, I reckon, you know, telegraphing this one or two properties inside of my self managed super fund commercial that I don’t want any more.

The rest of it will sit outside of it. So, you know, then you’ve got two different, two different things working in unison, but there’s not a lot of crossover and that’s pros and cons of super funds. Um, but, but I think this is the start of commercial investing. I think there’ll be a lot more of it, mate. So, uh, uh, look forward to it.

Nice. Scott O’Neill, Wreathing Investing. What is it? Wreathinginvesting. com. au. Is that where people would find you? That’s it, mate. Wreathinginvesting. com. au and, uh, And you’ve got a, you’ve got a commercial shop front now, I hear, around the, uh, around the traps. Yeah, just, uh, trying to get the internet hooked into it and then, uh, yeah, we’re not far from occupying it.

And then what, you’re going to do meetings and stuff there? Is that the idea? Yeah, we slowly get back into it. I think, um, I think the demand is, is not there where, where everyone’s happy for phone calls and zooms and that. So, um, that’s been working pretty well. But no doubt as the year, uh, matures, I think you do it more of that.

You’re gonna do an office opening with champagne, fancy champagne and all that sort of stuff. I don’t, haven’t thought about it, mate. I’m not really that fancy type of person, but, uh, it’s probably a good idea to, uh, maybe, who knows? Who knows? Maybe get that guy out. End of covid. Get that guy to fit out for you.

To tell him to pay for it. Oh, yeah. No, he did a good job. He’s, uh, yeah, we’re, uh, nearly ready for some photos, I think. I look forward to them. That’s, um, QBS, isn’t it? QBS property. Yeah, cool. All right. Good one, Scott. I’ll chat to you soon. Thanks for tuning in, everyone. Uh, as we go down this pathway. Well, 2022 is going to be real world, uh, investing in commercial property.

2020, 2021 is we did all our theory courses. So, uh, I’m a third, I’m a third year student now, mate. I’ve done my property 101. I’ve done my, uh, uh, property, uh, commercial property planning 232. Uh, now I’m a third year. I’m in the practical part of my, uh, coursework on, on property. So that’s a good way to think about it.

Time to earn your money out of it now. Time to actually, when the rubber hits the road, yeah, graduate, become a, I don’t know, someone’s already the property professor, aren’t they? Just a humble podcast to try and get by. Uh, this is, uh, it’s our commercial property. I’m Phil Tarrant, co host, uh, with Scott O’Neill, Breathing Investing.

We’ll see you next time until then. Bye bye.