Why invest in commercial property?
MORE and more investors are being drawn to the commercial side of investment properties, but why is this? Is it simply to diversify your portfolio, or are there other upsides?
The commercial specialists at Colliers International Toowoomba have provided some insight into what is luring investors into the commercial market.
Higher yields:
For one, when it comes to commercial properties, there are higher yields, and typically lower management fees.
Commercial properties can yield up to 10% plus, and management fees can be substantially lower than that of residential properties.
This alone is enough for some investors to make the jump from residential to commercial.
While there are several categories in the commercial space; including offices, retail, industrial warehouse and more, finding the right property can seem overwhelming, but if you keep a close eye on the market and do your research, the process can be extremely rewarding.
Security:
Another factor is the security that comes with commercial properties. Commercial leases tend to be much longer than those of residential properties, and rent is reviewed annually.
This means that you don’t have to constantly worry about refilling a vacancy and can sit back and reap the benefits of your investment.
Maintenance, outgoings, and insurance are generally paid for by the lessee, meaning that the return on commercial properties can be much higher when compared to that of residential.
Also, tenants of commercial properties will often invest in improvements to the building in order to help their business, which in turn improves your investment.
Once the tenant has invested in improvements, to suit their needs, it becomes unlikely they will vacate the property, which means the both the tenant and the owner remain happy and content.
This sort of arrangement allows for both parties to remain satisfied and mutually helps both with their perspective businesses, rather than one getting the short end of the stick.
Dan Dwan, managing director of Colliers International Toowoomba said, “While commercial properties may seem like a big, risky investment, they can be much more affordable than people initially assume.
If you take a close look at any real estate listing site, you’ll find commercial properties can be found for practically any price bracket.”
Also, be sure you are communicating with your bank on specific loans – due to deposits and lending criteria, you want to ensure you can sufficiently fund the purchase.
As with any investment, or any part of real estate, it all boils down to the effort and the work that you put into the process.
Mr Dwan said the commercial specialists at Colliers International Toowoomba “can offer guidance and assistance when it comes to your next commercial property purchase”. For more information, they can be contacted on (07) 4659 7875.