KEEPING UP WITH THE COMMERCIANS……COMMERCIAL’S THE HOTTEST WAY TO MAKE $$$

Mums & Dads listen up….forget the beach front bungalow & the investment pad for the kiddies, this baby is going to give you one sassy return. Commercial property is strutting some of the highest yields around with Mums & Dads dominating the sphere with around 40% owner occupiers & 60% private investors. A ritzy return of between 7-8%, approx. double of that seen in residential property, is without a doubt the hottest advantage!

Generally industrial property has the greatest rental return, followed by office property although it’s important to know that the higher returns can at times be a trade-off for the greater risk involved.

Generally, the risk comes from a potentially higher vacancy rate. If you lose a tenant from your apartment or house, it shouldn’t take long to find another. The same cannot always be said for commercial property.

Imagine for a moment, you’re the landlord of an industrial property, which was purpose built to make car windscreens. As Australian car manufacturing will cease in the near future, there is no need for this local manufacturer to make any more car windscreens, so it could take some time to find another tenant.

Rule of thumb, May is Australia’s peak period for commercial property with the volume of commercial properties solid, with no school or major holidays. October also sees another peak with more commercial properties coming onto the market.

Before investing, it pays to know commercial property is nothing like residential. The law is different, as are government regulations. Lease terms can also be up to 20 years.

They are different building structures, so the requirements of the landlord to maintain them + the cost is quite different.

Further, most banks only lend 60% of the value, compared to up to 95% on that of residential properties. Location is also critical.

It is imperative that the property is located where most people are driving or walking past, especially if you own retail property with another important factor being to read the lease, including what rent is to be paid, when the rent will paid& how much by + who pays for the council rates, insurance & repairs.

Before parking your hard earned $’s here, it definitely pays to understand commercial property as it is nothing like residential however the yield & return on investment can be superb. Call our expert, Michael Burgio on 0430 344 700 24/7 – we never sleep!