Rather like taking the highest slide or fastest ride at an amusement park there is something a little addictive about investing in the commercial sector. Yes, the risks are higher. So too are the rewards. While property is usually a good long term investment, commercial property – though still a long term thing – can roll far more zeros than most residential investments can ever offer.
And zeros we like. There aren’t that many things that the Other Half and I agree on but this is certainly one of them. And when there is agreement for the taking, I do all I can to encourage it, especially of course when zeros are involved.
So, with friends talking about the real world of commercial investment, and us up for a little dabbling, it was clearly time to get more knowledgeable about the situ. Whether it’s a warehouse, a shopping centre, an office block or a corner café, commercial property certainly has its temptations.
Why commercial property?
-The right commercial property can produce far greater returns than any residential property.
-Commercial property has long-term lease contracts and fixed escalation rates, which directly contribute to the increase in value of the property.
-It is easier to get a bond on commercial property as it is financed on the value and returns of the property and the lease contract, unlike residential property where a bond is determined by the buyer’s income.
-Commercial property has a 10-year bond period, which means the investment comes to maturity much sooner than a residential investment.
-Commercial property can be refinanced to release equity if suitable lease agreements are in place.
-Commercial property owners can negotiate triple net leases where the tenant is responsible for all maintenance to the property.
Tips for investing in commercial property
Article from privateproperty