If the rise in interest in Sydney and Melbourne’s property market is any indication, then the entire country may be seeing more than just a recovery to the rather tumultuous and ever changing housing market.
The climate of Australia’s housing market is fast becoming more accommodating not just to the extremely wealthy; it’s now not rare to see buyers who have modest income invest in commercial property as an added source of wealth.
But are you really ready to take advantage of it? Is investing in commercial property really that profitable and sustainable?
Investing in Commercial Property
Investment authorities, such as Sentinel Property Group, note that there’s an inherent risk in investing in commercial properties in the same way that there’s a real risk in any form of investment. However, it’s important to note that investing in the commercial market isn’t restricted to buying properties that are well known, such as apartments, restaurants, and motels, to name a few.
The current property market may seem bare, but it’s all about looking at and identifying opportunity where others can’t see it. A seaside property may not look like much, but it can become profitable if tailored to a certain demographic (tourists come to mind).
Apart from prior knowledge and a keen eye, what else are the requirements for truly sustainable commercial property investment?
Beyond knowledge of the property market as a whole, it’s also important to have some idea of the surrounding area where you’re investing. Just because it looks profitable on paper doesn’t necessarily mean that it is. A certain degree of understanding of the property’s surrounding location, as well as the ‘commercial climate’ of the area must be a contributing factor to your decision.
It’s already well known that investing in commercial properties is lucrative, but what exactly are the benefits?
One of the main draws to commercial property investment is that your cash flow is actually affected by local factors instead of macro factors which tend to affect property markets in its entirety. This means that even if there is a dip in the property market, the property you’ve invested in may not exactly be affected by it.
Properties such as apartments are particularly lucrative since there’s relatively stable returns and steady cash flow, and the tenants will be the ones paying for tax, maintenance and other utilities.
Finally, there’s a very large chance of appreciation and there’s even greater liquidity when you do decide to sell the property. In the end, your potential cash yield is entirely within your control.
Investing in commercial properties may seem like an intimidating prospect, but you don’t need to be a genius to earn money from a commercial building. It’s just important that you take your time and weigh your options carefully in order to make the most out of your investment.