Investor Interview: How to Build a Commercial Portfolio

The below interview with a client of ours, Ritesh Shah, owner of the One Stop Pharmacy chain in north-west London was published in the Autumn ’16 edition of The Estates Gazette’s Property Auction Buyers’ Guide and is about how to build up a solid commercial property portfolio: 

Ritesh Shah has built up a portfolio worth around £5m. He started by steadily buying six residential properties, mostly in London, and letting them through an agent.

He then turned his hand to commercial property. “The benefit is that, with 5 to 10 year leases, you just have one tenant for a long time,” he says. Another plus is that, under a full repairing and insuring lease, “if anything goes wrong with the property – if it starts leaking – the tenant pays the insurance costs.”

The first commercial property Shah bought at auction was a William Hill betting shop, offering a secure income with good covenants. Shah, who is advised by consultancy The Prideview Group, says: “I’ve also looked at Barclays banks, but the lease has to be more than 10 years – at least. If the lease is too short, the bank isn’t keen to lend.”

He has now bought seven commercial properties in total, spread across London, Kent, Bradford and Peterborough, five of which were bought at auction.

Preparation for bidding starts a month before a sale and involves careful calculations based on the finance available, rental incomes and likely sale price.

It is important to have a fixed price in mind before attending an auction, Shah says. He warns: “Never fall in love with a property. You’ll pay much more than it’s worth. You have to keep in mind it’s a business – it’s not your home.”

The full article features interview with 3 other private investors. To read it, please click here.

Private Investor Interview - EG Autumn 16

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