Solid Opportunities For Small Investors

More and more media outlets are talking up commercial and generating more interest in it.

Combined with sustained low-interest rates and falling value of the Australian dollar are certainly among the reasons for the increase in offshore investment in Australia real estate.

Also it’s feeling like there is a higher global demand for Australian commercial property means more competition for scarce assets, which is driving prices up fast.

But for the average small time investors like you and me (yes I still include myself in this category – I’m no multinational company) there are still plenty of deals out there which can really boost your lifestyle.

I was talking to a guy who’s seen all this media and was busy telling me that he couldn’t get into commercial because prices were too high.

I was thinking to myself: “You’re just looking in the wrong place and for the wrong things”

Here’s what I told him:

Get to know your asset classes

Office, retail or industrial? You’ve got to pick an area and get to know it well. You also need to know your numbers and be prepared to look out of capital cities.*

*there are still plenty of deals being done in capital cities as my students will attest, but for this guy, who had less to invest, regional would’ve been a better place to start.

Here are the main categories of commercial… something for you to think about. Some people are attracted to one kind of property others to another.

Retail

The most successful retail hubs are located in areas with high population growth and plenty of affluent young adults and families ready to spend, spend, spend. Before doing your own detailed research into demographic hotspots, take a look at where the retail giants are opening their new stores.

I said this in a past blog post – Byron Bay where I live used to be a high st full of hippy shops. These days it’s all High St clothing chains. Prices went up and priced the small local businesses out of the market (mostly) and the Big Chains are the ones who can still afford it.

Industrial

Industrial spaces are enjoying low vacancy rates at the moment, making them very popular with investors. Proximity to major transport infrastructure – roads, rail, ports and airports – is the key to getting a property with low vacancy.

I suggest for beginners to commercial that you always go for a leased property and I believe this is especially true of this sector.

Office

There’s quite a list of things to consider when it comes to investing in office space. Everything from available natural light to on-site car parking will make a difference to how popular your investment is with tenants.

Like with any sector you’ve got to consider demand and vacancy rates in the area. But again… if you can get an office already leased, then there’s less worry and more cashflow for you.

Keep your tenants happy

Choosing the right building is the first step towards having a high occupancy rate and strong return for your commercial property investment.

Teaming up with a first-rate property manager is important too.Personally, I never try and manage the property myself, I value my time and lifestyle too much.

A good manager will help secure high-quality, long-term tenants for your property, they’re also experts in keeping the property well maintained and making sure you’re prepared for the unexpected.

Go with what (and who) you know

Investing in any type of property is a big financial commitment. It’s important to feel comfortable with your decisions, and having the right professionals to support and advise you can make all the difference to your levels of risk and return.

Before you move forward with your search and purchase, be sure to consult a property manager, lawyer and accountant with expertise in commercial property.

They can help with everything from due diligence and financing your investment to advice on compliance obligations and tax.