Today we will hear from the author of a book called “The Money Factory: Teaching Women How to Make Money from Industrial Property” that sets out a guide to women who want to invest in industrial real estate. Lilly Cawthorn is our guest.
Kevin: Industrial property or investment in industrial property has largely been the domain of male investors, but I was delighted to see a book called “The Money Factory: Teaching Women How to Make Money from Industrial Property” written by my next guest, Lilly Cawthorn.
Lilly, welcome to the show.
Lilly: Thank you so much, Kevin. I’m delighted to be here. Thank you for inviting me.
Kevin: Congratulations on a great book, too. It largely has been the domain of men, hasn’t it? Why is that, do you think, Lilly?
Lilly: It’s not an area that is discussed even widely amongst men. I think it’s because it’s traditionally been lumped in with commercial real estate. People think of commercial real estate as shops and offices. Therefore, the idea of a factory doesn’t even cross their radar. That’s true for men and women, but you can particularly imagine that it doesn’t appeal to women. It doesn’t sound sexy at all that you invest in factories and warehouses.
Kevin: No. Given that’s the case, how did you get started?
Lilly: I arrived in Sydney almost 20 years ago. I traditionally invested in residential real estate. I purchased several houses, what I call ugly houses, and prettied them up because I love interior decorating. That was my thing. I arrived here in Sydney on holiday and met my husband. At that time, he was an industrial real estate sales agent, so I discovered industrial factories and warehouses through him.
Kevin: Did you buy your first property from him?
Lilly: No. What we did is when we decided to get married, we lumped everything we owned together and we set a goal. Both of us, fortunately, are great believers in setting a goal that you aim for and have an annual board meeting and be sure you’re on track. Our goal was that we would end up owning the industrial real estate that he was working at.
That’s how we got started. My first piece of industrial real estate was actually the building that the agency was running out of. After we got that up and running, then I bought my first factory.
Kevin: And you’re still running that agency?
Lilly: Yes, we’re celebrating 50 years – not us, but the business. Bawdens Industrial at Parramatta is celebrating 50 years of continuous business. My husband and another partner bought it in 2006.
Kevin: Let’s talk about industrial real estate. Lilly, in your book, you say it’s all about the tenant. What do you mean by that?
Lilly: I think the tenant is hugely important because I look at it as like a marriage. You need to be dedicated to look after each other and have a bit of give and take. If each one comes from a selfish point of view, then you get a lot of friction. My husband is big on this, as well, for educating the other people who he has in his portfolio.
If the market is poor, if business is having a tough time, if all of the utility costs are being put up and up and up, like we’ve seen recently with electricity and water, it’s not fair to keep raising the rent just because you feel you deserve an increase every year.
I’m lucky enough to have the same tenant in two of my factories that I’ve had for the last 15 years because I understand in the tough times, you have to be gentle, and then when times are better, you can maybe push it a bit harder.
Kevin: Would it be fair to say that the tenants you can attract to an industrial property are going to be business people so therefore, they’ll probably look after it a little bit better?
Lilly: Yes. That’s been my understanding. Across our portfolio of more than 700 buildings that our business manages – not my own portfolio but other people’s – we do hear the odd sad story but mostly the tenant is there to make their livelihood. It’s not in their best interest to trash your property. Also, Kevin, the leases are great. They really look after the owner unlike residential leases.
Kevin: Let’s round this chat out, Lilly, if we may with your tips for anyone who wants to get started in industrial real estate investment. What would be your first tip?
Lilly: The way I did it is I started small. It seemed a lot easier to understand a small strata title factory, about 200 square meters. It’s like a small apartment. Then you you’re usually only dealing with one person or a couple who are the tenants. It’s easy to visualize. You’re not intimidated when you have to speak to them. That’s how I started. It felt safe.
Then I just simply kept building more of the same, because eventually I accumulated $1 million worth of property that was bringing me $100,000 a year. After that, you learn and you grow as you move through it. Then I started buying bigger factories and warehouses and then getting involved in property trusts. Like anything in life, start small until you understand it.
The other big, big thing is have a separate bank account for each property and don’t spend the profit until you really know what you’re doing.
Kevin: Yes. With a lot of people who listen to this show, we’re always talking about putting together a team. A team that you may have for residential property, is that going to be the right team for industrial, or is there a difference?
Lilly: There’s a big difference, and it’s a very good point you’re raising. I consider myself an industrial property investor. I am not an industrial property expert – and I don’t want to be, because I have a team of five fantastic businesses who really look after me.
You need fantastic finance advisors. You need a really good accountant. You have to have a wonderful industrial real estate agent, not just an agent who thinks he can sell everything. You need people who understand the market, and then you need fabulous asset managers who look after you financial investment for you. We’re very proud in our company that it’s women doing that job, young women, and they do it better than men.
Kevin: Good on you, Lilly. It’s been great talking to you, Lilly Cawthorn. The book is called “The Money Factory.” If you’re interested in industrial real estate or even sticking your toe in the water, you want to start by reading this book.
Lilly, thank you so much for your time. It’s great talking to you, and all the best. We look forward to catching up with you again real soon.
Lilly: Thank you so much, Kevin. I want to tell your listeners that they can get a free Kindle version of my book by going to TheMoneyFactory.com.au and sending me an e-mail.
Kevin: There you go. TheMoneyFactory.com.au for a free Kindle copy of that book.
Well done, Lilly. Thank you for your time.
Lilly: Thank you so much.