Over the past three years, my husband and I have been building houses, living in them for the required time frame and then selling them for a good profit. We are just about to build our third home. After this home is sold, we will have a nice sum of money in the bank. Our only qualm is that the whole process takes a year to complete. After reading Steve’s book on positive cashflow properties, we got really excited because we don’t want to be slaves to our jobs. We want financial freedom. Investing in commercial properties seems like a viable solution. Is anyone out there doing this successfully? If so, do you have any tips on how to get started and what to look for.
Hi Bronwynd,
Sounds interesting; I can see where there are savings to be made in that you move into them before selling off property (hence saving on CGT; always a good thing to avoid if you can [thumbsupanim]) but isn’t building the home more expensive in the long run, than say buying an established home (maybe doing some reno’s if need be) instead?
I built a couple of times, and man the headaches!!!!! [wacko][upsidedown][tired] Cured me of ever wanting to go down that path for a third time!!!!
Keep up the good work,
Jo
Commercial properties require more cash into the deal (because banks will only lend up to 70%-75%). Also it differes from residential in one crucial aspect. If the property dosen’t rent, simply lowering the rent might not attract a tennant, mainly because business aren’t looking at the rental, rather what the benefits of the property give to their business. Also value is worked out on rental income, so no tennat = low valuation.
On the upside commercial has good benefits – the tennant pays all outgoings, the tennant may improve the building at no extra cost to you, yeilds and profit is usually higher than residential.
Rgds.
Lucifer_auWe have 3 commercial properties. As pointed out earlier, commercial properties are a pain if there are no tenants. Hence we stagger our buying so that the termination date of the tenants vary by at least a year.
It’s important to do a full due diligence before buying. It is also difficult to get good properties under $500,000. We keep in constant contact with a number of agents who specialise in commercials. Be persistent, keep checking them out & you’ll find one eventually. Good luck.
Monopoly, I agree that building is a headache guaranteed, but as far as making money by building it is in direct proportion to the value of the land you are building on.
In Sydney for example, if you have a property with a good size land and an old house on it, if it is in a cheaper suburb you may be OK in renovating. If you are in a better suburb, you are wasting your time renovating if the house is too plain, you are better off bulldozing it and building new. No hard rules, but the suburb and the market determine what is best to do.May God prosper you always.[biggrin]
Marc
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