Hi Everyone!
I was just wondering if anyone can shine some light on commercial properties for me?
I have been looking at many residential properties, and when I complete the 11 second solution on them, they seem to be overpriced by a minimum of $40k.
I have looked into some commercial properties that have great returns and the 11 second solution works like a dream but am I missing any golden rules? Are they more risky? I would love to hear everyones thoughts.
Also I am looking at properties that are anywhere from 5-8 hours away from where I live, does anyone else who invests long distance find this difficult?
Thanks!!
[
]The biggest difference is that you have to have about 40-25% deposit. 40% will get you the deal based on the income of the property alone, whereas 20-25% deposit you will have to provide financials.
Their is nothing wrong with investing 5-8 hours away or even overseas, as long as you have a good property manager.Some other things to think about:
– Commercial leases are normally long term (and may have specified rental increases).
– Smaller market (affects liquidity of investment)
– Sectors of commercial property market are predicted to experience high capital growth in the short-term.
– High yields.
– Because a lot of commercial property finance deals are assess on a stand alone basis it does not impact on your personal borrowing capacity (so long as you doesn’t have to provide a guarantee.
– Might be worth avoiding ‘specialised’ properties (e.g. restaurants, etc.)Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auHi RSTARR,
yes commercial properties do have higher returns and other benefits that make them more desirable such as all ongoing expenses are paid for by the tennant these include renovations council rates etc. Also commercial tennants are not as sheltered by tennancy laws as residential tennants are therefore a penalty can apply if they default on payments. in a nutshell, when they are running smoothly, commercial properties are a much better investment, you hardly ever hear from your tennants, they fix everything that is brocken. we dont bother with prop managers with ours we just give the tennants a direct deposit slip and watch the money going in every month.A few thing to look out for though: are you looking at leased or unleased properties? if leased when do the leases expire? some commercial properties can sit there costing money once the lease expires, they ane not as easy to lease out as residential properties so your you have to factor that into your plan. can your other investments support them in the case of these high vaccancy rates? i would also go through the leases very thouroughly make sure there is a clause that states that any cost incuured for chasing up late rents will be paid by the tennant and that there are personal garantees in the lease. get your lawyer to go through it before you buy. [
]hope this helps and good luck[
][][]
]
]
][The topic ‘Commercial Property Secrets?’ is closed to new replies.
