Kirsty Darkins shares her expertise on maximising returns from commercial properties. Discover innovative techniques to identify promising investments and leverage professional relationships for success. This episode is packed with practical advice and real-world examples, making it a must-listen for anyone looking to enhance their investment strategies in commercial property.
Join us for an in-depth discussion on high-yield commercial property investments.
Kirsty Darkins, a seasoned commercial property investor and mentor, shares six simple ways to find lucrative commercial properties and reveals three winning strategies that are currently excelling in today’s market.
Whether you’re a seasoned investor or just starting out, this episode is packed with actionable advice to help you build and secure long-term wealth through commercial property.
Kirsty’s experience and success in the commercial property sector offer invaluable lessons that can transform your investment approach.
Discover proven methods to locate profitable properties, including exclusive tips on asset management, commercial multiple occupancy (CMO) properties, and buying income-producing assets in today’s market.
Kirsty also emphasises the importance of building strong relationships with commercial agents and professional networks to unlock exclusive investment opportunities.
With real-world examples and case studies, this episode provides detailed insights into successful deals and practical applications.
Kirsty’s expertise, combined with Christian’s engaging interviewing style, makes this episode both inspiring and full of actionable advice.
Don’t miss out on this opportunity to elevate your investment game and build lasting wealth through high-yield commercial properties. Tune in now!
Resources Mentioned In This Episode:
>> What Is A SSAS Pension? [WT241]
>> Creating Leverage Using F.I.R.S.T [WT11]
Next Steps On Your Wealth Building Journey:
>> Join the WealthBuilders Facebook Community
>> Become a member of WealthBuilders
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Christian Rodwell (00:02.967)
joined today by Kirsty Darkins, seasoned commercial property investor and mentor, and we'll be exploring six simple ways to find high yielding commercial property investments and three strategies that work in today's markets. Let's get started. Kirsty, welcome.
Kirsty Darkins (00:18.382)
Thanks, Christian. Excited to be here and share what I can to help your community today.
Christian Rodwell (00:23.671)
Yeah, great. Always good to have you, Kirsty. This is not your first Wealth Talk podcast either. And in fact, back in March, so just a couple of months back, you hosted a commercial property accelerator for some of our Wealth Builders members and the feedback was absolutely outstanding. So what kind of things were you covering that day?
Kirsty Darkins (00:41.614)
Yeah, it was a great day. So we covered what's happening in the commercial property market right now. We did a site tour of one of our live commercial investment projects, which included us going out to the high street and exploring the high street and why on earth would you invest here? Isn't the high street dead? No, this is why. So we kind of brought that to life for people as an opportunity and then went through lots of case studies.
and did a really big question and answer session with lots of networking as well. So everyone went away with more commercial property knowledge than they came with and some ideas about what they could do next.
Christian Rodwell (01:22.295)
Yeah, yeah. Well, I'm sure we'd be doing more of those in the future. So stay tuned for more information. So Kirsty, to set the scene before we really get stuck in today, can you clarify what type of buildings fall under the term commercial property?
Kirsty Darkins (01:36.398)
Yeah, so it's any building that has a business as an occupier, ultimately. So that's everything from retail to office to industrial units, leisure, educational facilities, and then some specific niche sectors, such as kind of cold storage, biomass boilers, EV charging, all of that comes under commercial as well. But it's anything that's occupied by a business, ultimately.
Christian Rodwell (02:05.143)
Yeah, great. And tell us about your journey briefly as a commercial property investor. What drew you to this niche and what kind of investments have you focused on over the years?
Kirsty Darkins (02:15.15)
So I am a commercial property surveyor by background. So I was in corporate for kind of 17 years, didn't invest for myself whilst I was helping other people make lots of profits from commercial property. And then decided, yeah, actually, do you know what? I do want to do this for myself because I don't want to have to trade my time for money forever. And I want to build my own investment portfolio. So my commercial knowledge, I then took over into investing.
for myself in commercial. And I'm focused on high street commercial properties. So CMOs, most people know what a HMO is. CMOs are the commercial version, commercial multiple occupancy. And then also industrial properties is what we're focusing on now. So high street and industrial is where I invest myself.
Christian Rodwell (03:02.999)
And alongside that, of course, you now work as a mentor and trainer, helping other people with existing property experience, hone their own expertise and expand their own commercial portfolios. How do you guide them in acquiring and growing their investments exactly?
Kirsty Darkins (03:18.254)
Well, it's very much about so we have our commercial property club, which is where people start to learn and find the right strategy for them, because it's different for everyone, depending on where you're starting from and what result you want and how you're funding it. And then I have a mentoring group and we also source property for clients who just do not have time to find the deals themselves.
Christian Rodwell (03:41.463)
And why do you prefer focusing on commercial property rather than residential? Are there unique benefits and challenges?
Kirsty Darkins (03:48.654)
It's different. So I would say there are definitely some unique benefits, which is that the tenants are responsible for everything in terms of maintenance, compliance, they fit out the units. There's a lot less work for commercial landlords to do. And your gross rent is your net rent aside from the cost of finance, because tenants also pay for everything and they take longer term leases. So once you've set up a commercial investment,
You can go on more holidays, that's what I do. You can also invest your pension directly in commercial property. So it's one of the simplest ways to invest your pension in property and build your assets and your rental income inside your pension. And you can claim capital allowances through commercial properties, which is a tax benefit to offset your income or your corporation tax, which is another thing that can't be achieved.
Christian Rodwell (04:19.031)
Haha.
Kirsty Darkins (04:44.11)
investing in residential. So I would say everyone should always invest in at least one commercial property to take advantage of capital allowances.
Christian Rodwell (04:51.863)
Hmm. So you said different. Do you think there's more skill and more work involved in commercial rather than residential?
Kirsty Darkins (04:58.894)
No, I think you need a different set of skills and it's a different kind of work. So I would say there's more work to put in at the front end on finding the deals. It's very different approach to finding the deals. It's a different set of knowledge. You need to understand businesses, tenants, leases, demand, but there's a lot less management to do. So I'd say it's different and it's...
more difficult in some places and simpler in others in comparison to residential. So I think the word different is the best explanation.
Christian Rodwell (05:36.855)
Yeah. Wealth builders, we always focus on generating long -term, predictable, recurring income. Sounds like commercial property can certainly deliver that.
Kirsty Darkins (05:47.598)
Yeah, absolutely. Because as I said, you've got long tenancies, you know, three, five, ten, ten year leases set up income producing, nothing to do to manage that. Very hands off. So if that is what you're looking for is long term income, commercial property is a good way to achieve.
Christian Rodwell (06:08.819)
I know you source commercial properties as well for people, Kirsty, but I've heard that 50 % of commercial property investments never reach the open market. So can you explain a bit more about that?
Kirsty Darkins (06:20.558)
Yes, I mean, something like that. It's not like I haven't done an actual study and come up with that percentage. It's just it's a it's subjective based on mine and the team's experience in in the market. But yes, somewhere around half of all commercial properties don't come to the market because commercial property is all about relationships and network in terms of finding deals. It's not about online portals and sitting behind your computer and talking to just estate agents to find deals. So.
A lot of commercial deals are traded between contacts and networks. So agents, for example, have their little black book and they like to do as little work as possible whenever possible. So they just want to go out to investors they know are already good for transactions and not have to openly market them. So a lot of the time agents won't openly market deals. They'll just go to their favoured investors or the investors that happen to phone them up that day.
and ask the right questions. That's often how it works. And then also you have commercial portfolio landlords who tend to trade with each other. So you build a network of fellow landlords and when you want to sell, you contact your fellow landlords to ask if anybody wants to buy. And then you've also got professional networks such as asset managers within companies who hold commercial property. They're looking for speed and certainty when they're capital raising and they don't want to have to go through the process of an open market.
transaction. So again, they just go out to their network and sell it that way.
Christian Rodwell (07:52.695)
Okay, right. So if the best commercial properties are not found on online portals, perhaps we can look at some different areas where you can find commercial property investments. So we said we were going to share six simple ways. Is now a good time for us to go through those ones, Kirsty?
Kirsty Darkins (08:10.798)
Yeah, definitely. So six simple ways. So we don't live online. It's not Rightmove Commercial, it's not Zoopla, it's not EGI Property Link. We use those to find agents, not properties, which won't make much sense to you if you've only ever looked at residential. So what I'm saying is if you don't know where to start looking for commercial agents, because that's your number one source of commercial property deals. Of all the deals we source at the moment in this market, 80.
80 % of our deals are coming direct from our agent contacts. That's how important commercial agents are to you and to build that relationship. So put in your search criteria, we might move commercial, say Birmingham, 15 Mile Radius, and see which agents come up who are active, go onto their websites and start connecting with the agents that way. So commercial agents.
They will bring deals to market, but they'll also have off -market deals when you're asking them questions about what's coming to market, who do you know who might want to sell, are there any deals that are falling through? So I'd say 50 % of our deals are deals that we pick up when they fall over. And you've got to be in touch with the agents to know that that's happening. And they need to know that you're ready to transact and have a relationship with you to bring those deals to you.
So commercial agents are our number one source of deals. Really important to build yourself relationships with three or four agents in your investment patch and really start working on that relationship to get the deals flowing. And then the second one is auctions. So auctions are really good for commercial property because most commercial property landlords, when they set want to sell, want speed and certainty over price. It's just how we work.
We're kind of, we're very business minded and it's not all about the price. It's about the fact that we've got a reason why we're selling this property and we just want speed and certainty because that's what we're used to as commercial landlords in terms of managing our properties is it being quite straightforward. So auctions are a great hunting ground and right now in what is a buyer's market unsold at auction.
Kirsty Darkins (10:28.558)
is a great sourcing strategy. So you don't need to buy in the auction. You can make offers prior. They're often not accepted. Just do all your due diligence and be ready for when they go unsold to make your offer. But also be ready to be patient. So we are doing deals now on auction properties that went unsold last July, last September. And they've been sitting there with values gradually decreasing as the quarterly valuations happen. And now they're ready to accept our offers.
You know, so it's a waiting game, but it's a great, it's a great place to hunt for commercial deals. So that's number two. Number three, which people often don't think of is as a property investor, and well, just as an investor, we've all got professionals working with us. We've got accountants, solicitors, insurance brokers, planning consultants, architects, all the professionals. And guess who?
Christian Rodwell (11:06.071)
Brilliant.
Kirsty Darkins (11:26.734)
A lot of their other clients are commercial property investors, often with a portfolio. And people don't think to ensure that their professional advisors understand what you're looking for and what you're doing and make the connections. So my professional advisors know that we're always in the market for buying more commercial investments. So they connect me with their other clients off market. And we've done a few deals.
that way. So that's another way of finding deals that aren't anywhere on the market. And another reason why 50 % of commercial properties don't come to the market because it goes through networks and make sure you're using your existing network and telling them what you're looking for and what you do. Another way is councils. So councils are selling off a lot of property at the moment because they are all struggling for cash, as we know.
So Birmingham, in my area, Birmingham are having a fire sale at the moment of a lot of their commercial portfolio. Often it goes through auction, but right now they've got that many deals to do that if you contact them direct and you're ready to go, they will send you the details and they're ready to negotiate. So I would say councils particularly at this current point in the economy are another good source of deals. They have their own in -house estate.
surveyors, so you're asking for the estate teams in -house to be connected to the surveyors, introduce yourself, tell them who you are, what you're looking for, and they will start sending you what they are selling. And they're ready to take offers. In a similar vein, taking advantage of the market at the moment in particular, insolvency practitioners. So there are a large number of administrations starting to happen.
not just businesses going into administration, but actually portfolio landlords where commercial portfolio landlords have over leveraged themselves, their debt has matured, they can't refinance at the rates they were on previously, and they haven't got enough capital to put the amount of equity back into their portfolio that the banks are asking them to put in. So they're having to sell assets.
Kirsty Darkins (13:46.158)
or ending up in administration where they haven't been able to sell quickly enough. So we've picked up a number of deals in recent months from insolvency practitioners and administrators. So building relationships with the insolvency practitioners and also the larger surveying firms like CBRE, Savills, Colliers, they all have in -house insolvency teams who deal solely with properties in administration and the selling.
of those. So they're another good connection for finding those kind of deals. So again, connecting with the right kind of agents. And finally, direct to vendor, which I know is often a main sourcing strategy for residential. I would say this comes sixth on my list of all the ways that I've just described, because it's slower for commercial. So there's less commercial property than residential, only 13 % of investable.
property in the UK is commercial. So if you're going on that ratio, if you send 100 letters out, you've got to go quite far and wide on the direct to vendor strategy. It can work. You can use software like Nimbus Maps or Property Filter or any of the others that are out there to help you find opportunities. But it is a slower burn. It does work. But you have to commit to it if you're going to go direct to vendor and send letters every month.
do the follow up, be patient, build it up over time, but that can work as a sourcing strategy as well. So those are our six strategies, agents, auction, professionals, councils, insolvency practitioners, and direct to vendor.
Christian Rodwell (15:31.351)
That is fantastic. And the word that just comes to mind is relationships there, you know, and you've emphasised it. It really is not something perhaps you can expect to just literally click your fingers. It takes time to build those relationships and to build that trust as well.
Kirsty Darkins (15:37.006)
Okay.
Kirsty Darkins (15:43.086)
Bye.
Kirsty Darkins (15:47.758)
Absolutely, yeah, and it's so important. It's what everybody is surprised by when they first start in commercial is the difference between how you source residential investment opportunities and, I've got to go out and talk to all these people. I can't sit behind my computer. Absolutely. You have to be prepared to do that, but it will yield you some really great results.
Christian Rodwell (16:09.279)
On that note, Kirsty, one thing that we talk often about wealth builders is understanding your wealth profile and your personality type. And we use a test called wealth dynamics. And there are different people out there. Of course, some of us are very creative. Others love the connection and the networks and the relationships. Do you find there's a type of person that seems to excel in commercial property or?
you know, does everyone have their kind of role? So those who are really into the detail, obviously are great at doing the analysis of the deals.
Kirsty Darkins (16:40.494)
Yeah, it is very much about right people, right roles and partnering where you need to or bringing in additional resource. So for example, in my own commercial investing, I'm the people person. I go out and build the relationships with the agents, find the deals, do the negotiating, but I don't project manage my investments. I don't do the nitty gritty of the numbers and that my business partner does that.
We also have a finance manager who really gets into the weeds of working with our investors and keeping us on the straight and narrow with budgeting and collecting rents and all of that. So I think you need to be aware of who you are and that if you want to invest in commercial property, you do have to be able to build some relationships or somebody does. So you're going to need someone in your team or to collaborate with someone, get someone to do it for you or a business partner who is good at what you're not.
good at if building relationships, networking is not really your strength or what you like to do.
Christian Rodwell (17:45.079)
I couldn't agree more. So we've covered the six ways there to find high yielding commercial property investments. Should we have a look now at the three strategies that are working in today's market?
Kirsty Darkins (17:55.63)
Yeah, I mean, there are multiple strategies working, but I would say there's a top three at the moment, which is where we are focusing our own investing, but also focusing our activity on behalf of clients. So the first is asset management. So asset management is about adding value to commercial property through leases and tenants. I call it paper exercises. So no physical development works.
to add value and that's because it's become really difficult to stack the development deals with the cost of development, lower values, it's time intensive and there's kind of insufficient reward in that sum of the time at the moment. Whereas the asset management deals, you add value through renewing leases, uplifting rents, letting vacant space, removing tenant breaks.
And then you can hold them for the medium or the long term and exit when it's the right time for you, either on refinance or flip for capital uplift, as you often would with development. So I'd say asset management is a key strategy that's working really, really well in today's market. There's lots of tenanted investments coming to market where people need to sell. And it also means that you've got a return on your investment from day one because those investments are cash flowing.
from day one, which is what I really like about them. The second is CMOs, so commercial multiple occupancy. It mitigates your risk. You've got multiple tenants at any one time in that investment, maximizes cash flow and maximizes value as well. So looking for commercial mixed use properties. That's not commercial ground floor and residential above. That's commercial ground and first floor.
with a mix of different tenants and a mix of uses. So you might have retail on the ground floor, leisure or offices on the first floor. You can also have industrial and office CMOs. So any mix of commercial uses, but commercial multiple occupancy is a really great strategy right now. And because we are in a buyer's market,
Kirsty Darkins (20:11.982)
I don't use this. This isn't usually in my top three of strategies. If we're not in a buyer's market, we are in a buyer's market. We are at the bottom of the commercial market right now. Buying yourself an income, a straight income purchase is a really smart thing to do right now. Buying at low value. So you buy at low value, immediate income for the long term, absolutely nothing to do to that property apart from sit back and take the income.
Now the value is going to increase over the next couple of years on its own by virtue of the market as commercial property values start to increase, the capital value of your asset will increase. And so there's nothing to do at this point to enjoy capital uplift as well as immediate income and nothing to do. So why wouldn't you buy some income producing assets where you're literally buying yourself?
and income. It's like commercial property investment off the peg. You know, that's my third preferred strategy at the moment in this market.
Christian Rodwell (21:17.343)
Yeah, I like the sound of that one. And do you have any examples either of one that you've purchased yourself or one of your students have purchased recently?
Kirsty Darkins (21:27.406)
of the buying and income. Yeah, so we've done a few, actually. So let me think. So we've done, we've done a couple that have been single lets for pension investors, where their aspirations are long term secure income. So really important about location, really important to have a strong business in there on a long lease, somewhere between eight and 10 % returns is what the pension investors are looking for. And they're looking for.
commercial. So we did one in Newark, which has got five years on a lease to a long term independent cafe operator. They've been there for a very, very long time. It's in a great location. It will re -let all day long if anything ever happens to that tenant. That was an eight and a half percent return. It came on the market for 230 ,000. We bought it for 160. And that's really where you're at in terms of, we say,
Christian Rodwell (22:20.407)
Very nice.
Kirsty Darkins (22:26.574)
If you think you're being cheeky, move to rude at the moment in the commercial market, okay, in terms of making offers, because it's all there for you to take. It's a buyer's market. The debt finance market is thin. If you've got capital, you're in a strong, strong position. So make offers around 40 % below asking at the moment. Start and you'll probably achieve 30 % below asking a lot of the time. What else have we bought on a buying?
Christian Rodwell (22:30.103)
Ha!
Kirsty Darkins (22:56.494)
buying. so we've just negotiated terms on a property in Leamington, which is a nice affluent location, very strong high street. Again, it's a single unit, it's vacant, it will let all day long, landlord needs to sell at a really unhelpful point in the asset cycle, which is unfortunate for them, but fortunate for our clients. It's vacant, it will let for somewhere between 35 to 38 grand a year.
probably to a small independent business. We're buying that one at 305 ,000. So if you let that at 38 ,000 a year, you've got a nice 11 and a half percent, might even be 12 off the top of my head, return. And your capital value, you're going to add six figures plus to your capital value just by tenanting that property and then be able to refinance out of it to hold or flip it if you want to take.
capital uplift. So there's a couple that we've done recently on the buying and income basis.
Christian Rodwell (23:59.095)
Yeah, good examples. And, and you mentioned there's obviously less, less commercial property available than there is residential. And it's more hands off once you've, you know, set it up. So, so therefore does it matter so much where the property is located? Does it mean that you can expand your search area or perhaps that you have to expand your search area outside of perhaps your one hour perimeter of where you live?
Kirsty Darkins (24:23.534)
Yeah, that's a great question. And the answer is absolutely. It means you can be really remote if you want to. And I'll give you a great example. So one of our clients is based in the Southeast, has just agreed a deal in Prestwick in Scotland, because there's absolutely nothing for them to do. Again, that's a buy an income deal that is too good to not buy. You know, they're kind of, okay, so they're all tenanted. There's nothing to do for years on those leases.
We connect them to a local agent so that if anything does ever come up, they have a local agent on standby who knows the location, knows the tenants, can help them with anything they need help with. But yeah, you can absolutely, you don't have to go that remote. That's an extreme example. But yeah, I go two hour radius most of the time for our investments, but you can go much further because there's nothing to do with asset management deals or CMOs or buying an income a lot of the time.
And the work that there is to do is done by professionals on your behalf. So as long as you've got the agent contacts in that location, you can be much broader in your investment patch.
Christian Rodwell (25:32.919)
Yeah, well, Kirsty, you've shared some brilliant information with us today. But as with any strategy, the skill is in the detail. So not being educated, doing poor due diligence, not understanding the valuations, you could come a cropper. So it always begins with education. If someone wants to find out a bit more about how you help them to understand commercial property, where's the best place for them to head?
Kirsty Darkins (25:57.07)
So they can head to our website, kdcommercial .co .uk. And we will also provide you with a link for people to book a call if they're interested and just want to find out more about how it might work for them. And that's free. It's just a 30 -minute free call for us to find out about you and see if we can help you.
Christian Rodwell (26:18.455)
Yeah, that's been great speaking with you today, Kirsty. Thanks so much for being a great guest on Wealth Talk.
Kirsty Darkins (26:22.798)
Well, thank you for having me.