How To Become A Commercial Property Investor

You don't need to be rich to own a slice of a commercial property, but like all investments you need to do the ground work before making a decision.

Unlike residential properties there are more issues to consider namely - do you acquire shares in a property trust, or do you join a property syndicate?

There are four essential bits of information that every investor needs to know before becoming involved with commercial properties.

  1. Is the property worth the value?
  2. How much is the stamp duty?
  3. Is the rent net or gross? It is important to know what expenses the property incurs, and who is responsible for paying them.
  4. And lastly does the yield reflect the quality of the improvements to the property, the terms of the lease and the potential of the tenants.

Commercial Property Investor - going on your own

Going it on your own is the most expensive way to get into commercial property investment.

One cheaper way of becoming involved with commercial property is to purchase a parking lot which can be bought for less than $50,000.

Investors do not like to dabble in something with which they are unfamiliar and hence they stick to what they know eg. fast food outlets, bank branches, shopping strips and sometimes a service station.

These properties provide consistent returns. Most of the tenants are blue chip businesses and have substantial backing and are therefore rarely vacant.

Location of Commercial Property

It is a miss conception that commercial property needs to be in the CBD as there is good commercial opportunities in the fringe CBD and in the suburbs.

Investors should consider access to public transport when considering the location of their commercial investment.

The commercial property should be in a busy area preferably near businesses of similar nature.

Google Earth or Google Maps can assist in providing valuable information such as major space and nearby development.

Syndicates - simplest way to buy Commercial Property

A simple way to purchase a commercial property is to combine your resources with others to buy a commercial property, this may be achieved by an accounting or legal firm.

Many investors have become wary of the share market and have decided to invest in a commercial property instead.

The size of a syndicate is usually between 2 and 10 investors. If investing in a syndicate one should make sure that everything is documented and get legal advice.

You need to structure it in such a way that you can get out when you want to get out.

When getting involved with a professionally structured syndicate is best to have an experienced manager.

Loans for Commercial Property

If you are planning commercial property investment and need a loan, please let our mortgage brokers to help you. Fill out the Commercial Loan Enquiry form and our brokers will compare rates from major banks and lenders to find you the right loan for your commercial property investment.

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What to find out more? Enquire now

Published on November 11-th, 2009 in Property Investment
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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