Investing in commercial property can be a lucrative endeavour, but for those embarking upon it for the first time, it can be a lot to navigate. It requires specialised knowledge, vision and skill to make investments that are intelligent.
Aside from the business acumen necessary, there are certain factors that are important to consider from the outset. Below you'll find five of the most pertinent questions to ask yourself before you become a commercial property investor.
1. Which Type of Property Is Right for You?
One of the first things to decide is what commercial property to invest in: retail, office, industrial, hospitality, the list goes on. Which one you choose to focus your attention on will depend on a number of factors.
Are you familiar with any of these areas of commerce? Does the location you're looking to invest in have an exciting opportunity in one in particular? These are good questions to guide you in a particular direction.
2. How Are You Going To Invest?
There are several different routes you can take when choosing how to make your commercial property investment. Direct funds or listed real estate investment trusts (REITs) are two of the most common methods. It's also possible to buy a property outright, depending on how much money you have to invest.
You also need to decide whether you will invest as an individual, through a self-managed super fund (SMSF) or through another entity such as a company or a trust.
3. Have You Weighed up the Level of Risk vs Return?
With any investment, it's necessary to understand all of the variables, costs and risks involved. Potential untenanted periods, broader economic conditions and transaction costs and taxes should all be taken into account.
Once you've fully assessed the attendant risks, you can then weigh these up against the property's earning potential, in order to make a fully informed decision on whether or not this is a sound investment to make.
4. What Kind of Timeline Are You On?
The kind of investment that you make and the kind of property you eventually choose to invest in will all be dictated by the timescale you're working towards.
Are you looking for an immediate return on your investment? Are you eager to invest right away, or are you happy to watch the market for the perfect opportunity? The answers to these questions will give you clarity about which investment is right for you.
5. Have You Done Sufficient Research?
Before you make a financial decision as big as this one, you'll want to have done your research. It's important to do your due diligence on the type of commercial property you're looking at as well as the property itself.
You should also look into the location: what is its economy like? What are the growth projections in the immediate future? It's imperative you have satisfactory answers to these types of questions before you go ahead with any investment.
Investing in Commercial Property: An Amazing Opportunity
When done right, this type of investment can be a great business decision and a steady source of revenue. If you're considering investing in commercial property, why not get in touch with us to see how we can help.