How commercial property investment opens a new world to even cautious investors
Most people understand the ins and outs of residential property ownership, but commercial property investment opportunities present a more daunting face.
Australia has the equal third highest rate of home ownership in the world, but shrinks from the same commitment to commercial property*.
Commercial property introduces riskier factors such as exposure to macro- and micro-economic fluctuations, extended vacancy rates, and capital intensive fit-for-purpose issues.
Residential capital property growth and rental yields can give returns of more than 10 percent. By contrast, commercial property investments can deliver significantly higher income but nowhere near the capital gain one can expect from residential property. Commercial properties generally produce more reliable long-term tenancies but in the current climate it’s possible to sustain longer periods without income.
Portfolio Management Services’ commercial property investment experts concentrate on three sectors only:
Commercial property investment windows arise less frequently than residential property opportunities. However, stable commercial property ownership confers some advantages that residential investments do not enjoy.
Power of the commercial lease
Most residential property leases are standard and can be drawn up by a competent agent. A commercial lease, however, allows you as the owner to specify a wider range of conditions and to demand longer tenancies.
Commercial property leases usually require the tenant to pay most, if not all of the outgoings or expenses. These include:
- Recurrent charges (council rates, body corporate fees)
- Utility charges (water, gas, electricity, sewerage)
- Repairs and maintenance.
As a result, most if not all rental income goes straight to your bottom line.
Commercial property investment advantages
Owning commercial property gives you access to a surprisingly large range of advantages. They include:
- Control of your own business property
- Tax deductibility
- Fixed cost planning
- Access to equity and debt funding
- Capital growth
- Additional cash flow through whole or part rental.
Speak to us on 03 9621 1044 about the opportunities Portfolio Management Services can provide on 03 9621 1044.
* www.nationmaster.com based on CIA World Factbook