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6 advantages of investing through a property syndicate

September 18, 2017
Categories: Commercial, Investments

Investing with a commercial property syndicator is a sensible consideration if you’re chasing peace of mind while receiving a robust return. Here’s why.

Investing with a property syndicate or unlisted property trust is a safe and secure way to profit from commercial property investments.

1. You get access to bigger and better investment opportunities

An established commercial property syndicate has excellent links to the commercial real estate and investment world. More often than not, they’ll be the first to find out when premium properties are coming to the market.

Even better, they also have access to those properties not typically advertised for sale. These are called off market properties.

Through a syndicator, you’ll be able to invest in the kinds of properties you’d never get access to otherwise.

2. You can lean on someone else’s experience

If you’re inexperienced, investing through a syndicate gives you access to sophisticated, specialist skills and contemporary knowledge. This even goes for wholesale investors, who may be experienced in share or residential property investing, but missing the knowledge for successful commercial property investment.

Professional syndicate operators not only know what makes a good investment, they know their way around all the snags and pitfalls which can easily trap a first-time or new investor. They understand the purchase, investment and development process intimately and know how to extract the best possible performance from your investment.

3. You get access to better and cheaper financing options

Commercial syndicators have access to better financing options than individual, first-time, or novice investors. If you want to invest $100,000 in a commercial property, for example, you can go to the bank and you’ll be offered a loan on certain terms. But when you’re transacting millions of dollars of property yearly, you’re able to get much more favourable terms. It’s similar to the retail and wholesale market: wholesalers get better pricing because of the quantum and frequency of their buying.

You’ll also be saved the time and hassle of forms, valuations, budgeting, inspections and meeting the kinds of regulatory hurdles in place — all of those matters become the responsibility of the syndicate. So, leveraging the size, scale and scope of an established operation becomes a huge benefit to investors.

4. You pay less to service suppliers

Similarly, syndicate managers have established relationships with mortgage brokers, accountants, valuers, builders, developers, lawyers, and so on. There’s a cost saving here to the investor because those suppliers charge the syndicate far lower fees than an individual or one-off investor, simply because of the sheer volume of work. Administrative costs eat away at your investment’s profitability. Keeping these costs low is money in your pocket, particularly if your syndicator is taking part in the investment with you and therefore doesn’t charge you for administering these trades and service providers.

Caption: Showrooms make an excellent commercial property investment.

5. It’s a hands-free, “set and forget” investment option

Commercial property is considered a stable investment when compared to other investment options; long leases mean the returns are secure and the risks are minimised. But, just like owning a residential investment property, there’s a certain amount of administration and maintenance during the course of any year.

When you invest through a syndicate, it’s all taken care of by the management team — so you’re not dealing with tenant complaints about broken air conditioners or faded car park lines. They handle the problems as and when they arrive and do all the backend administration to ensure the tenant remains happy, including negotiating new leases. (Responsible syndicates will also hold substantial reserve funds to handle any unforeseen capital expenditure. Make sure you ask what your chosen syndicate’s policy is before you invest).

6. You can diversify your property portfolio

Investing in commercial property through an established syndicator typically means you’re able to invest a smaller amount of capital, so you have the option to diversify the risk of your savings or capital. Diversifying your portfolio has the advantage of minimising the inherent risk associated with any one particular type of investment because your capital is spread across various properties, locations, states and tenants.

If you’d like to learn more about commercial property investment in Australia, contact Properties & Pathways. We’re happy to show you our existing portfolio of properties and chat about our integrated investment opportunities.