Investors with a residential properties are often constrained from growing their portfolio by the lack of income. For all of it’s massive advantages the field of residential property is known for small yields and the quest for extra yield leads investors down unpromising paths.
There is a natural solution however. A solution that is often favoured by the wealthiest. Commercial property.
We love helping buyers into high yielding, quality commercial properties.
Commercial is a field primarily driven and influenced by numbers instead of emotion, a good hunting ground for logical investors. Yields are significantly higher than residential with many more expenses and responsibilities able to be placed on the tenants with a well drafted lease document.
Commercial is a logical next step for residential investors.
A few of the advantages of commercial include.
1) Strong cash flow:
Achieves significantly higher net yields than residential property, with tenants paying for outgoings. Cash flow can also benefit from impressive depreciation on certain properties and also recoverable expenses.
2) Stable Income:
Longer leases of 3-10+ years with built-in rental increases and business owners as tenants who don’t like to move often. CPI bouncing at the moment is causing some impressive rent increases.
3) Low risk:
High demand (in the right industries) with favourable economic headwinds in Australia and increasing rents due to strong inflation.
4) Potential for capital growth:
Rental growth and strong demand from investors puts upward pressure on prices for quality commercial assets.
5) Diversification:
Growing your income streams away from an existing residential or share portfolio.
Industrial property has been a strong performer in recent history and a popular investor choice.
When you control freehold land with industrial there is the potential to manufacture growth and equity by refreshing the building and also by being creative, which is a large benefit.
I’m currently reading the excellent autobiography of Australian entrepreneur Dick Smith, who needs no introduction for people my age, and I’ve included a link for younger readers.
Dick is an inspiring person as he played the game of business and money and won.. and then went and did plenty of other things. The following page is from his book and I thought particularly interesting as he’s known for business after all, and not for property investing.
source: Dick Smith – My Adventurous Life
