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How to access big league property investments

Categories: Commercial, Investments

Not everyone gets access to the very best commercial property investments. So, why not? And how do you fix that?

If you’ve ever read the book Rich Dad, Poor Dad, you’ll remember the author, multi-millionaire investor Richard Kiyosaki, recalling his frustration as a young man that his buddy Mike’s “rich dad” wouldn’t help him invest.

Young Richard is frustrated by this but Mike’s father explains to him that if he becomes a successful investor eventually the sorts of big league investment opportunities he gets will come Richard’s way, too.

Whether Kiyosaki’s story is fact, embellished, or fable, there’s a big truth in this — and it works for commercial property investment, too: Not everyone gets access to the big league investments.

So, why not? And how do you join the big league?

Investors like working with experienced investors

Sellers of multi-million dollar commercial properties tend to be sophisticated investors and marketers. When they put a property on the market, they won’t just sell it to anyone. They vet potential buyers heavily. They want to know whether the buyer has the necessary finances, resources and experience behind them to make the investment work. Have they engaged in commercial property investments before? Do they understand what they’re getting themselves into?

Why? It removes the transactional risk from the sale. The vendor wants peace of mind the buyer knows the lingo, has transacted at this level before and understands the asset type. So you need a particular level of professionalism and experience to even get a place on the starting block. Someone who has never invested in a commercial property before normally doesn’t stand a chance against a professional outfit with a portfolio of properties and ready access to finance.

Many of the very best deals never hit the market

It’s also true the very best commercial property investment opportunities are not always advertised. Why would they be? It’s often not clever to advertise you’re selling, particularly if you’re a listed property fund. If billion-dollar investment firms start selling off a few assets, for example, there is a chance their investors might get unnecessarily scared. What happens when the CEO of a listed company sells their stock? The share price plummets! And while it’s a slightly different landscape, the same tendencies apply. So they’ll often keep it quiet.

Instead, these vendors will sell the property “off-market”: they’ll contact people they know in the commercial property investment space who might be interested in the transaction. So there is no formal sales campaign. How can you be a part of that conversation if you don’t even know the property is for sale? You can’t. It’s extremely common and the small-time or once-off investor would never even realise their disadvantage.

You can invest in commercial property if you do it right

So, is commercial property investment always a “Rich Dad” thing? Or can anyone with a good nest egg behind them invest in it? Well, of course they can invest. They just have to be aware of the pitfalls and do it sensibly.

Investing with a commercial property syndicate is a great way to add commercial property to your investment portfolio. Syndicates are professionals who know this kind of investment intimately, back to front. They know the industry, the compliance and due diligence; they know the players, the agents, the bankers and the right people to make a stunning investment work. They’re precisely the kind of organisations which get access to bigger, better and more profitable investments.

Commercial property syndicators also do the hard work for you — they manage the property, the funds, the loan, the finance, and the tenants and ultimately ensure the maximization of the asset value. All you have to do is wait for your cheques to arrive. (Which is why it’s such a popular option for those with self-managed superannuation funds.)

If you’d like to learn more about investing with a commercial property syndicate, contact the team at Properties and Pathways.