Industrial rental investment. DO or NOT?

[Tamas Vastag]

Hello.

I am looking for some advise.

I made an offer for a small industrial building about 3200 sqm for 250 000 eur.

Today there are 5-6 companies renting different size spaces.

The down payment is 20%

The current rents are about 6000 eur/month (the building is not in the best condition)

The building is from the 70’s it is brick and concrete with insulation, but still needs repair work for about 50 000 eur to make it more attractive and durable.

Mortgage payment is around 2000 eur/ month

The location is not bad (near a middle sized city) but not the best.

Please, is this a good investment? What are the risks?

Thanks for any kind of advice, this would be my first investment in real estate, and don’t want to have it as last.

Greetings from Hungary

[Andrew Lyles]

Haven't done work anywhere outside of Texas, but what I like about Industrial properties is they are usually lower cost/time consuming to maintain. Tenants tend not to call on the landlord as much and usually upkeep of industrial properties is pretty simple. Now I am working with a client from Europe and apparently standards are higher in Europe than US for Industrial properties so my opinion may not have merit. The biggest risk I see with industrial is trade companies have higher potential to cause higher level of damage to the property. If they don't see clients they may not care what damage is caused and just the nature of their work can cause more damage. That being said just make sure that you have proper coverage in place to protect against those damages. Whether that is your insurance or theirs. Just make sure you check on laws for your specific location that you are protected from all possible situations. I have not invested myself yet, just speaking as a commercial agent who intends to invest, which will include industrial properties in Texas.