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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
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
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