INDUSTRIAL, HOTELS, MEDICAL & CHILDCARE

Assessing whether a commercial property is going to provide a good return or not depends on the type of property involved.

Capital growth is the main driver of return for industrial property while it is income return for retail. The length of time remaining in a lease is often a key factor when getting a loan for a commercial property because the rental income helps service the loan.

The benefits of getting into commercial when the residential property market is all over the shop and lending opportunities not so great are obvious; but, in any economy, developing more of a balanced portfolio across assets is a good financial strategy.

Commercial property investment is not necessarily the hugely expensive asset class that people think. It doesn’t always require millions of dollars to get into. Reality is that $250,000 cash, or less, may be what it takes.

If your commercial investment comes with a good tenant on a longer-term lease than you are likely to have with residential, and a cash flow that is better than what residential returns might be in the given market, you should recognise an opportunity. And with solid long lease in place, you can benefit from the built-in annual rent rises, which can help you pay off the property even faster.