Many first time investors are looking to get into the commercial property industry. Here we highlight some of things investors should keep in mind.
CommercialRealestate writes that selecting a commercial property investment;
based upon an excellent location, strong demand from a range of potential tenants and good physical condition is better than focusing on a high yield.
Please read on for a quick overview on several commercial property sectors to research:
Retail Investments
For a first-time investor, strip shops have been a traditional preference. “These are more often than not simply a retail store, but will sometimes include office or residential upstairs. There is also strata retail which will be cheaper because you are generally not paying for a land component,” says CBRE Melbourne retail director Mark Wizel.
Some things to check for include:
Main-road exposure and easy traffic accessibility.
Strong anchor tenants.
Strong lease covenants with long lease terms in place and well-established tenants who are likely to renew their lease at the option.
Zoning, such as allowed uses, and potential future development.
Local area competition and vacancies.
Office Investments
Strata-titled offices are a sometimes wise first-time investment because they typically command a lower price, meaning the buyer pool generally consists of first-time investors, self-managed super funds and passive investors seeking premium rental yield, says Colliers International Melbourne metro sales executive Raphael Favas. They appeal to investors as they provide rental yields in excess of a typical freehold property, with minimal ongoing need for maintenance.
Some things to check for include:
Properties with a strong lease in place.
Location.
Condition.
Outgoings.
Proximity to shops and services.
Proximity to public transport.
On-site parking.
Security.
Industrial Investments
In the past two years, industrial strata units within new complexes have become very popular due to being considered an affordable entry level investment – typically they’re priced between $500,000 and $800,000 per unit....the benefit of buying off the plan is the opportunity to exchange early on in the piece, and it also allows the flexibility to lease the units while they are being constructed. “You may also be able to capitalise on some capital growth from the start to the end of the project,...There has also been a high degree of rental growth for smaller industrial units, which has in turn led to good yields that might be better than putting money in the bank.”
In terms of location:
properties located in infill areas and established precincts near local amenities such as transport and road links, infrastructure projects, residential areas (people like to work close to home), business parks and shopping areas should ensure your investment will have a good chance of securing a tenant if it becomes vacant.
Also worth taking into account:
Properties with full-height roller-door access
Heavy vehicle accessibility
Local area vacancy for similar product types.
Read the article in its entirety here.
And as the article point out, before you begin your research:
engage the expertise of your bank or a finance broker to understand the financial commitments for different types of assets.
Please let us know if we can help in any way to get your bank, or non-bank commercial finance needs sorted.
Are you looking to purchase commercial or industrial property within Australia and require private financing? Read on below:
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