Getting Started In Commercial Property: What Do I Need to Know?
While not as straightforward as residential property, commercial property investment can be a very rewarding venture. Funding Options managing director Dom Cassisi shares what you need to know before getting started.
Higher Risk with Higher Return
It may take you a while to find a tenant for your new investment property. This is where a tricky mix of patience versus panic can come in. Residential property tends to be more fluid in times of financial hardship. If your sole tenant of a commercial property falls on hard times, it could be a lot harder for you to stabilise the situation.
Choose your tenant carefully when the time comes. Someone with the backing of a large company or even the government would be a safe choice.
Commercial property is great for investment because you usually don’t have to put much work into it once it’s up and running. But you still need to keep in mind a few risks. For example, how will you manage the costs if the property goes vacant?
You'll Need Help With Your Lease
When it comes to your lease for a commercial property, remember that it will probably be lengthy. We’re talking a minimum of five years, on average. Both you and your tenant need to be ready to commit.
Commercial property leases are not just long – they’re also extensive documents. You’ll need professional legal help to draft one, to help you ensure that nothing is overlooked.
Make sure you and your tenant are familiar with important details in the lease so that you both know what’s expected of each other.
Get Familiar With the Local Market
To set up a successful commercial property, you need to be familiar with the need in the area.
Do you understand what’s driving the demand for businesses in your neighborhood? Population growth, changes in demographic and new infrastructure will all influence the popularity of the business on your property.
You’ll need to be prepared for the way interest rate increases will slow consumer spending and company growth. By anticipating key factors, you can make smart decisions about setting up a commercial investment property.
A commercial property agent will help you find the right business match and also knows what advantages and deals to offer.
Why Get into Commercial Property Investment?
For all it’s risks and uncertainties, commercial property investment offers some great benefits:
– Less maintenance
– Predictably steady rental income
– Significant cash benefits
– Easier to deal with non-compliant tenants
– Increase rent as value of property increases
– Tax benefits
– Diversify your portfolio
It’s a great way to increase your wealth, provided you do your homework and maintain balanced expectations.
To maximise your investment in commercial property, it is crucial to get the best possible loan deal possible.
But with literally hundreds of options offered by banks and finance providers it’s a complex area to navigate, which is why you should speak to an experienced finance broker.
Whatever you do, don’t try to go it alone when you start exploring commercial investment properties. It’s easy to get swept up in a great “deal” with fancy wording and “extra features”. You’ll need financial experts to help you interpret the fine print and identify the best deal for you.
For finance help with your next commercial property investment, contact Funding Options for a free, no obligation discussion.
– Dom Cassisi, Managing Director