10 Jan Talking shop could be your candy store
YOU don’t have to be a business-person or real estate expert to become an investor of commercial property.
Greater yields and longer tenancy periods are a couple of terrific benefits from choosing a commercial property over a residential one.
But perhaps you haven’t given it much thought – or felt that it’s too risky – or wondered if it’s really “as safe as houses?”
There’s certainly more to consider in a commercial property purchase, but with professional guidance it won’t be daunting. Take note of some more benefits that raise the positives of buying commercial property:
As a commercial property owner you’re likely to have fewer responsibilities than being the landlord of a residential property, and fewer outgoings that you have to pay.
It could be a contractual agreement for the tenant to pay the water and council rates; (although a lot of commercial property owners prefer to pay council rates themselves to ensure timeliness).
If your tenant refits the property to suit their purposes, they can be obligated in the contract terms to rectify the premises upon completion of their tenancy.
You won’t have the problems of pursuing back-rent if you obtain deposit bonds or a bank guarantee for a specified time of say, two or six months. This way, the rent is set aside for you by the bank – just in case.
Terms of lease are generally longer; such as three or five-year terms, and options thereafter.
In today’s market entry level prices for homes are in the vicinity of $340k – $400k, so if you’re like most buyers, you’ll be mostly caught-up in whether you can meet the mortgage repayments around that figure. But the really exciting thing is that well-focused research can uncover some overly-modest priced products – like commercial sheds around the $150k price point – in some cases , less – making your mortgage repayments more than twice as manageable.
However, it’s also about how much money you have in the bank right now. The deposit required to buy a commercial property can be predicted between 20 – 30 percent, it will depend on which lender you set up your mortgage with.
On the downside, some commercial addresses experience long vacancies, which is very concerning for owners and as homes sell more readily than commercial properties, the resale experience can be an exhausting process.
As the economic and property markets climb their way back, we will see property prices rise – it’s already happening.
What’s thrilling about commercial property is that whilst the crowd makes a beeline for homes, savvy investors head for commercial properties, because they know this sector usually trails closely behind residential – so buy-in prices can be more attractive.
Which mortgage lenders are suitable for your next purchase?
Find out by asking Kelly & Co Financial Services to sort through your financing options today. Call Kelly & Co Financial Services on 1300 54 94 54