Buying commercial property remains a secure investment in Queensland, providing the opportunity is well researched and the buyer understands the risks and benefits.
Owing commercial real estate can be an excellent way to diversify and shore up a property portfolio, but it's important to minimise risks and to take a long term view of the investment - focusing on short-term cash flow can lead to overlooking some of the best areas and opportunities.
These key points should be considered:
- Remember the basic principles - even if you're a first time investor, you can choose to invest in commercial or industrial property. The principles are similar to any property investment, so the two critical criteria are location and quality.
- Know the demographics for the area - it's important to research and understand the local area. Depending on what the building or site could be used for, you will want to know what average household incomes are, for example, within a radius of five kilometres, as well as the average age.
- Consider accessibility - a property located close to transport, with good access and parking facilities will be in greater demand and usually command a higher rental.
- Study the vacancy rate - a buyer obviously must know how long the leases are for the current tenants and when they are up for renewal. Initially the return on investment might be very good but then the leases come up for renewal very quickly and completely change the equation.
- Choose the right building - the building should be desirable and of a size to suit the area's potential. It also should be sound and as low maintenance as possible. As a general rule, more modern buildings need less upkeep and are usually more attractive to tenants.
- Seek expert help - get help from specialist commercial property agents and a property management firm, as well as from your accountant or financial advisor. There are a number of financial and legal matters in a commercial property investment, as well as how you will lease and manage the property. It's worthwhile getting good, qualified advice.