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Commercial Property: The Great Australian Investment
If owning your own home is the great Australian dream, then owning your own investment property is the great Australian aspiration.
According to Real Estate Institute of NSW President, Mrs Cristine Castle, most people opt for an investment unit, house, vacant land or holiday home by the beach but many first time investors overlook the often better returns in industrial, commercial and retail property.
“There are many benefits in investing in factories, warehouses, offices and shops that are not available to investors in residential property but you need a good agent to help you navigate your way through the process,” Mrs Castle said.
Mrs Castle said one of the major differences in investing in commercial property instead of residential is your relationship with tenants.
“There are always going to be good and bad tenants and while bad tenants can be managed with the help of professional property managers, they are even rarer when it comes to commercial property.”
“The difference is that commercial tenants have a vested interest in keeping their premises neat, tidy and well maintained because it is where they do business and the presentation of their business is a measure of their reputation,” Mrs Castle said.
For a property investor it means that the tenant often fixes small problems with the building and often pays for improvements.
Industrial, commercial and retail tenants also usually pay for outgoings including: property taxes, council rates, and insurance.
The leases for these tenants are far longer than residential ones and often include annual rent reviews. Contractual obligations are also far more defined and provide significant legal remedies for landlords to enforce agreements on maintenance, damage or rent.
“For many people the idea of investing in commercial property is like stepping into the unknown but professional real estate agents take the mystery out of the process,” Mrs Castle said.
Specialist agents provide a whole range of services and work with investors to reduce their risks and meet their specific needs.
Those services include using their market knowledge, research and valuation skills to find the right property to maximise income and capital growth. They will also find tenants, help negotiate leases, manage property and property portfolios, and give you an understanding of operating expenses, rental income and occupancy profiles.
As investors become more experienced they will provide development and project management skills, sell property and become part of your team of advisors to maximise investment returns.
“The quality of the advice you receive is essential which is why it is important to deal with agents who are completely professional,” Mrs Castle said.
The REINSW is the largest commercial provider of education and training to the real estate industry and plays a significant role in setting agency standards.
Investors can check whether an agent is a member of the REINSW by looking for the ‘R’ logo or visiting the Institute’s website.
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