In 2020, Mike pivoted into Light Industrial using the proceeds of two HMO’s he flipped for significant gains. Swopping high intensity letting HMO units for truly passive commercial income is Mike’s new growth engine and all new acquisitions are planned to be in this sector due to increasingly onerous residential rules.
Mike first investment was a 2,000 sq ft Light Industrial Unit at Ash Court. It went to auction in Allsop’s (Nov 2020) commercial auction. Despite not seeing inside it before buying it (totally inadvisable but the numbers were that good!). Mike bought the unit post auction for £152k cash on an impressive 8.8% yield and it has since been valued at an impressive £190k. Simply the best deal Mike ever made in his entire career, as it meant +£38k instant equity on purchase.
In 2021 Mike followed it up with another purchase of another 1,200sq ft Light Industrial Unit in Peterborough. This is the area of the business is a growth area of Mike’s business as it is true passive income, tenants are all on Repairing and Insuring leases and it is not subject the increasingly onerous residential legislation. It is Mike’s dream to own more of these units as they the most profitable on a time invested basis. The only catch is, of course, they have to be purchased outright in cash, due to the expensive commercial finance (significantly more than Blocks or HMOs) so growth is slow but Mike intends to make another purchase soon in 2026.
After owning these units for since 2020 Mike now has a good base knowledge of Commercial lease legislation too and Mike has enjoyed expanding his knowledge across multiple sectors.