Property Investing/ Property Advice: Series 5 of 7; Series 5: Property Research: Part 4

I believe you must engage a Buyers Agent with every property purchase, Using a Buyers Agents/Buyers Advocate and Property Advisor is key to more property investment success. These are extracts from my latest book “The Australia Property Investment Handbook 2018-2019″. In all good book stores now. Also Read Property Finance Made Simple and Property Investing Made Simple. Property investment, using buyers agents/ buyers advocates, is so important, and if looking in Melbourne for example, you should look for Melbourne Buyers Agents or Melbourne Property Advisors. We also service NSW and QLD, so look for Sydney Buyers agents and Brisbane Buyers agents, and QPIA advisors

Investment strategists, property investment, buyers agents, Melbourne buyers advocates, Melbourne Buyers Agents, Melbourne Property Advisors,

 

Part 4

Commercial Property

In Australia more than five million people are employed by over two million small to medium enterprises. Source (ABS). The industry is growing rapidly and exceeds 400 billion as of 2016.

The biggest difference with this market and the residential market is the fact that more macro and Government policy conditions affect the commercial space. Economic as distinct from market conditions can vary across commercial property grades and regions. Commercial property is riskier when it comes to vacancy. More macro level classifications apply to commercial property, more so than residential. Entire sectors can be affected at any one time in an entire region, rather than being more centric to a particular suburb. Tourist accommodation, retail property, office and industrial can all suffer in an entire region.

The problem with commercial property is its inherent lack of long-term, stable growth – just like the stock market, which is directly linked to the corporate world.

Many experts say that there is a high percentage of business failure in the first two years. Dunn & Bradstreet research shows that more than 80% of business failures are related to cash flow (rather than sales pressures). Vacancy rates can be high which soon offset the previously accompanying higher yields, so yields now are no longer taken for granted as being at 8%, they can be around 5-6% quite often.

Commercial property may include a business, shop, retail, resort-style offices, factories, farms, multi-unit developments, warehouses, industrial units, mixed residential and commercial use, and income-producing properties. The list goes on.

The values of the properties concerned are based on the rental returns. Often the tenant pays all the outgoings (i.e. insurance, rates, and fit out). This is a different market and requires different knowledge and due diligence.

Strata offices are becoming popular as people can rent them close to where they live, and it allows them to escape the distractions and interruptions at home, and expand their business at the same time. (Strata title refers to a situation where the individual/entity owns part of the property such as the dwelling, i.e. townhouse, unit or office, but they share ownership of the rest of the property such as some or all of the land, driveways, gardens, foyers, corridors in apartment buildings etc. Normally more than two dwellings that share a drive or common land require a body corporate/owners corporation to be established to insure the land and manage the responsibility of the shared areas. Caravan parks, resorts, retirement villages are more obvious examples of this.)

Constructing more than three dwellings on one title would normally require a commercial loan.

For your own free copy of my comprehensive research checklist, please go to my website  australianpropertyadvisorygroup/resources

This checklist covers most things that should be considered when researching, there are instructions on the checklist of how best to use it.

 

RULE: If you follow this process, you will dramatically enhance your ability to time the market better, take more advantage of out-performing potential, reduce the risk, and balance the effect on your lifestyle – and better your future.