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A beginner's guide to commercial property

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  • A beginner's guide to commercial property

    COMMERCIAL property investment is not just about investors with deep pockets and buying tall buildings.
    Ordinary Australians can own a slice of commercial real estate for only a few thousand dollars, but like all investments they need to do their homework.

    There are more things to consider than with residential property investment. Do you go for a tiny piece of a shopping centre by buying shares in Westfield Group? Do you pool your resources with friends or strangers through a property syndicate? Or do you go it alone, either inside or outside of your super fund?

    CB Richard Ellis director Philip Rundle says there are four key financial questions every investor should ask before taking the plunge.

    Firstly, is the lease secure? "Always read the lease and ask questions where there is any uncertainty," Rundle says.

    Secondly, what will the stamp duty cost you?

    "Stamp duty can often be a big amount and get forgotten in the purchase calculations," he says.

    Thirdly, is the rent net or gross?

    "It is important to know what the property's outgoings are and, more particularly, who pays for them," Rundle says.

    The final question is: Does the yield reflect the quality of the improvements to the property, the terms of the lease and the strength of the tenant?

    It's likely to be a lot tougher to find a new tenant for your office or warehouse than a three-bedroom townhouse on the city fringe.

    Going solo

    As most commercial properties won't give you much change from $1 million, this is the most expensive way to get into commercial property investment.

    But investors can be creative. Rundle says car park spaces are a form of commercial property and can be bought for less than $50,000 a space.

    Solo investors tend to stick with what they know. Savills national head of research Tony Crabb says they often target "the ever-popular bank branches, fast food outlets, occasionally a service station, and the street-front shop".

    "Sometimes they run their own business out of it," he says.

    "These properties are regarded as having stable returns.

    "Most remain occupied for a long period and are rarely vacant."

    Sean Ryan, director of specialist property law firm FR Law, says research is a key to success, as is "good financial and accounting advice about the correct vehicle in which to structure the investment".


    Read more ...

    Jenny

  • #2
    A good post on commercial property. Can any one post the current trend of the commercial property market in Australia?

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    • #3
      IF the army is looking for somewhere to put a new shooting range it might want to consider one of Australia's many shopping malls.

      Judging by the number of lunchtime shoppers this week in Melbourne Central, one of Australia's busiest shopping centres, they could be pretty certain they wouldn't hit anybody.

      Two weeks after the end of January, the traditional summer sale period, store after store remain emblazoned with signs offering discounts of up to 75 per cent.

      http://www.theaustralian.com.au/busi...-1226004673080

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      • #4
        Great Information or guide on Commercial Property .

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        • #5
          Yeah, good tips for commercial property beginners. I'm more experienced and understand more residential property so this was useful.

          From my view, commercial property does have its benefits over residential property such as relatively more stable and higher income streams because you deal with other businesses that pay you rent.

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          • #6
            Yes...good info, Beginners will welcome this and so as the not so old timers.
            Location is always big chunk in Investing.

            cheers

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            • #7
              Yeah. Location is a very big determinant for th success of your commercial property.

              You could have a B quality property or even C quality, in an A quality neighbourhood - and this could be much better than an A quality property in a B or C grade location.

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              • #8
                I know that the tips will also help me when it comes time to invest in commercial real estate. My partner and I were thinking about investing in commercial property in NSW.

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                • #9
                  Originally posted by mattinvestor View Post
                  Yeah. Location is a very big determinant for th success of your commercial property.

                  You could have a B quality property or even C quality, in an A quality neighbourhood - and this could be much better than an A quality property in a B or C grade location.
                  Good point mate. If you can secure something with "value add" potential you are on to something!

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                  • #10
                    Commercial property is in scary times I think with online business taking off, but I suppose it only applies to retail commercial sites.

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                    • #11
                      Originally posted by jenni_nextplace View Post
                      Commercial property is in scary times I think with online business taking off, but I suppose it only applies to retail commercial sites.
                      good point

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                      • #12
                        an oldie but a good. thanks for the tips.

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                        • #13
                          Originally posted by REIT View Post
                          an oldie but a good. thanks for the tips.
                          Spammers can't even use correct grammar ffs.
                          Last edited by Davo36; 17-03-2014, 08:33 PM.
                          Squadly dinky do!

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                          • #14
                            It is a awesome guide on commercial property for the beginner. If you are going to buy a commercial property please ensure that you are taking it from a reputed builder in a good location. Commercial property is a long term investment with good returns.

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