Commercial real estate is trending today as more and more property investors realise the financial gains that can be made in the commercial property market and invest in residential property. However, it is essential to invest in commercial real estate wisely.
This article will offer a brief introduction to the world of commercial real estate investing in Australia. If you want to get into commercial real estate, you’ll first need to better understand this market and its dynamics.
Table of Contents
Step One Is To Get Educated
Before diving into the commercial property market, you’ll first want to learn as much as you can about property investing in general and investing in commercial properties. The best way to achieve this is by signing up for a real estate investment course.
Find a quality property investment course that industry experts run, people who have already achieved success in residential and commercial property investing. Even if you’re a complete newbie to property investing, by the time you’ve completed the course, you’ll have gained an excellent understanding of what’s involved and how to go about making sound investments.
Demand For Commercial Properties Is Driven By Economic Factors
While there are many similarities between residential and commercial property markets, there are some key differences. For both sectors of the real estate market, demand drives things. However, with commercial properties, economic factors have a strong influence.
For example, if the economy is currently tanking, not as many people will be looking for commercial properties to rent to start a business. When the economy is doing well, the demand for commercial properties naturally increases.
This is something you need to keep in mind when looking for a commercial property to invest in. You’ll want to learn as much as you can about what drives the commercial property market, so you make wise investments that are profitable in the long term.
Hire a Property Investment Consultant
Genuine and experienced property investment consultants can be a property investor’s best friend when you team up with a good one. You’ll want to find an investment consultant who has knowledge of and experience in the commercial property game. They’ll be able to advise you on all of the dynamics that drive the commercial property market and tell you what to avoid, so you don’t make costly mistakes.
Property investment consultants offer a wealth of industry knowledge, so it only makes logical sense to seek their assistance. They’ll help you with defining your investment goals, creating an investment strategy, along helping you find suitable commercial properties to invest in.
Location, Location, Location
You want to invest in a commercial property to derive a consistent rental income. Buying in the right location is even more vital than the residential property market when it comes to commercial properties. The success of most commercial enterprises relies on customers, something that doesn’t affect the residential market.
So long as the price is right (and your investment consultant can help with that), you’ll want to buy a property in a popular location or an area that’s experiencing considerable growth. Commercial properties tend to have long leases for tenants, so if you buy in a place where a tenant’s business continues to thrive, there is far less likelihood of losing income due to your property being vacant for an extended period.
It’s also a good idea to keep parking in mind, so customers can easily access the property.
Seek Sound Financial Advice
You’ll need to understand the financial aspects tied to investing in a commercial property. This includes understanding the differences between loans for homes and loans for commercial property. It will also include understanding available financing options, such as loans for paying earnest money, as well as details about how to release the earnest money payment.
Another factor to consider is the rent you can ask on the property. This needs to be weighed up against what it will cost you to repay a loan and any other expenses associated with the property.
Seek advice from your accountant, bank manager, financial advisor, or investment consultant.
The Takeaway
If you get it right, commercial property investing can be highly lucrative.
For those seeking an alternative, however, you should also consider residential property investment.
Whilst it may be a hassle to get started, you may see a quicker return on your investment once the ball is rolling – especially if you find the right location.
For investors looking for comparatively low housing prices and massive rental demand, property company RWinvest suggests Liverpool as a strong contender for your hotspot list.
All in all, it’s vital that you seek the advice of experts in the industry and learn as much as you can about all things property before jumping in.
