Manufacturing Income: Buy-and-Hold Loans For Industrial Real Estate Investment

California has sort of a weird reputation that isn’t always in line with what actually happens in the state. It is known as a wild and wooly place, full of dreamers and counterculture activists. It’s earned that, to an extent, but that reductive narrative obfuscates other Golden State realities. It’s the most productive farmland in the U.S., the major player in all aspects of the computer industry, huge in aerospace and defense, and one of the major industrial centers of the country. The latter had slipped over the last generation, but it looks to be coming back, and for real estate investors, a buy-and-hold loan from Socotra can help can you in on California’s industrial resurgence.

Industry, Manufacturing, and Warehousing

To understand why this is a potentially lucrative market for real estate investors means knowing a little bit about California’s history, particularly Southern California. For most of Californian history, the major industrial base was centered right around LA, in the sprawling and often-grimy suburbs surrounding the city (for an extreme example, think of the barely-fictional Vinci in the second season of True Detective). It made sense to have these there: the huge population of Los Angeles could easily commute to work, and the cities themselves didn’t have to worry about running many civic services.

Of course, as manufacturing declined, so did many of these cities. They still produce a lot, but they stopped being such a strong economic engine. One thing California never lost, though—and literally never could—is its proximity to the ocean, and its deep ports. People outside of LA never really think of it as a port town, but along with Long Beach and San Diego, the Port of Los Angeles is one of the most important shipping regions in the world. It is because of the this that the regional economy has been transformed yet again.

Manufacturing is on the rebound, and is centered in the vast and sprawling Inland Empire. The Inland Empire was once known primarily for agriculture, but development has made the population explode. There is still an enormous amount of room in this ill-defined region, generally considered the San Bernadino-Riverside-Ontario metropolitan area. A lot of that room is being filled with manufacturing centers and giant warehouses.

These centers and warehouses are being used to create goods that go out around the country and around the world. Its proximity to ports makes the Inland Empire a key region in the global economy. Much of what is made are parts for cars, ships, and planes, or for larger machines. There are plenty of low-tech consumer goods, from toys and books to tables and chairs, as well. However, the key is the growing field of electronics, especially as the California tech sector continues to shift into Southern California.  

We talked about how that will impact residential and commercial real estate when it comes to offices, but not about industrial real estate. The need for R&D labs, for manufacturing, for storing, and for shipping is poised to grow. That means that existing warehouses have to be upgraded, which provides a great opportunity for real estate investors with a hard-money loan.

How a Buy-and-Hold Loan Can Help You Succeed

Imagine you have purchased several warehouses and factories. They previously made mostly low-tech goods, and some of the plants manufactured chemicals. These were great for the old economy, but if you want them to be valuable to the new wave of businesses, they need to be retrofitted for smarter and more efficient energy consumption, newer environmental standards, and for better technology. That’s where a hard money loan comes in. An equity-based hard-money loan can provide the liquidity to fix up a warehouse with the intention of flipping it as soon as possible. Companies looking to move into the region may not want to build a new warehouse or to do all the renovations themselves. Positioning your property as ready to go is a great investment strategy.

Of course, you may not be looking to flip it right away either. You may be looking at the market and thinking that it isn’t close to peaking. It is a hot market, but the fire may just be getting going. A hard-money buy-and-hold loan will work for that as well. These kind of loans have a smaller principal and an extended life of loan. This allows you to hold onto your property, and to make adjustments, without having to sell before the market hits its peak.

Whatever your plan, Socotra Capital is your hard-money partner. If you are a professional with a proven track record, our programs offer unmatched “buy-and-hold” options so that the loan can work for you. The California economy is always changing, and we can help you grow along with it.

 

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