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Learn to invest in Australian real estate.
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Learning to invest in commercial real estate
There’s no fast way to learn how to invest successfully in commercial property. It can take years of experience to fully understand the market and the processes involved in securing a long-lasting investment.
But there are fundamentals every investor should have in their arsenal so that the complex nature of commercial real estate investment doesn’t seem so… overwhelming.
Even if you’re not looking to invest alone – if you’re someone looking for a set and forget investment by investing alongside a property fund – it’s handy to know what to expect before you buy your first commercial property (or invest in your first property syndicate).
What is a good return on commercial property?
If you’re new to investing, you may have heard commercial property can provide solid returns. But what exactly is a good return on a commercial property?
For commercial property investors, yields are typically much higher than residential property. Commercial yields might be anywhere between 5 per cent and 10 per cent, while residential yields usually sit at around 1 per cent and 3 per cent. Read our blog post on commercial property returns to learn more.
Yield is the primary reason many investors get into commercial property investment. So many investors forget that capital appreciation (the difference in the amount they sold and paid for their property) can actually be substantial in the commercial realm.
Want to calculate the capital gain on a potential commercial property purchase? Use our calculator.
Get exclusive updates on our next investment!
What capital gains tax means for commercial real estate investors?
The capital gains found in successful commercial property investment can come with a nasty surprise at the end of the sale’s financial year, when the tax man might look to collect on your prosperous investment in the form of capital gains tax.
The capital gain is added to your taxable income and may increase the tax amount you need to pay for a given financial year (even having the potential to bump you up into a higher tax bracket).
There are many ways to prepare for capital gains tax before the tax event occurs – there are also many ways to minimise it. Learn more.
How to read the property market
Successful property investors don’t have a crystal ball to help them forecast the future of the commercial property market. But they do have insights which can help reveal what the horizon has in store for their investment, or any potential investments they are considering.
Firstly, consider the drivers of the commercial real estate market. These are the forces which move property values up and down, and which control the demand of those players in the market. Here are what we consider the three key drivers of the commercial real estate market.
Next, you’ll want to ensure you understand the economic indicators that signal the future of a market. Some we’re show you’ll know, but here are five unique economic indicators that many investors overlook.
Purchasing commercial property: Your first step
Once your research on the market has been done, you’re confident the right time to buy is now (consider also that ‘time in the market’ usually trumps ‘timing the market.’), and you’ve found a commercial asset worthy of your capital, it’s time to investigate every detail of the property.
It’s by no means a complete list, but check out our due diligence checklist for buying commercial property. We’ve been in the game for decades and will never waiver from our belief that a successful investment is made or lost in the due diligence phase. There is simply no substitute for conducting a thorough due diligence on your potential purchase.
Before you sell
After several wonderful years of owning your commercial property, with its value having skyrocketed from a thorough due diligence and a robust tenant (or tenants) providing a consistent passive income, you’ve decided it’s time to divest the asset.
This final stage of your investment journey is no easy feat, and shouldn’t be taken lightly (no matter the excitement garnered from the potential returns you expect to record). Want to be prepared before you reveal the price tag of your divestment? Here are our six tips before selling a commercial property.
Alternatives to investing alone
By now you must’ve realised that commercial property is not for lazy investors. Being hands-on is the name of the game. You should have your ear to the ground throughout the entire journey, and you must be willing to accept the uncertainties the market will throw at you as a commercial landlord.
This is why our investors prefer to pass this responsibility on to the experts.
There are plenty of advantages of investing with a property syndicate, including access to a vast network of property professionals and potential for far larger returns than if you invest alone. After all, you’ll have access to assets with far larger price tags when you invest with others.
Note: A property syndicate, also known as an unlisted property trust, is very different from a Real Estate Investment Trust. Knowing the difference may help you with the decision of which alternative you choose over investing alone.
Considering investing in 2022?
If you’re considering putting your money into Australia’s commercial real estate market this year, you’ll want to do your research before investing. Here’s what to expect in 2022.
Don’t forget, you can also subscribe to our investment updates to ensure you don’t miss out on one of our exclusive investment opportunities.
Properties & Pathways offers high-quality investments for sophisticated investors. Want exclusive access to our next residential property investment? Subscribe to our investment updates here.
Learning to invest in residential real estate
Residential real estate is a favourite for most Aussie investors, from first home owners excited about their $350,000 apartment purchase to sophisticated investors building their multi-million-dollar portfolio. So, you don’t need to look hard to find plenty of information on how to invest.
It might seem overwhelming at first, but our simple philosophy is that investors should always turn to property fundamentals before they buy. Here are a few insights for those preparing to invest in their first residential property, or those who simply want a refresher in investment fundamentals.
Understand market controls
Demand and supply are the two dominating factors that push property values up and down. Recently, since the pandemic began in Australia, we’ve seen demand outstrip supply in our residential property market. More Australians have returned home from overseas and those dreaming of a long European getaway have instead put their money toward residential investments.
The result has been an influx of buyers and, well, not enough property for sale. And this has caused property prices to catapult by over 22 per cent in the 2021 calendar year.
The Property Council of Australia, Australia’s leading real estate body, has submitted a proposal to the Australian government to improve housing supply. They say affordability is at all-time lows for the average Australian, and the government has been pushed to do something about it.
Understanding what controls market values is one key to your success as a residential property investor.
Get exclusive updates on our next residential investment!
What to do if residential property is out of your budget
There are many options available to those would-be investors who’d like to participate in residential real estate investment, but are seeing prices spiral well out of their budget. Think you’ve missed the boat? Think again.
You don’t need millions of dollars, or even hundreds of thousands of dollars, to be a residential property investor in today’s market. Many property investment companies offer investors property syndicates and property funds to place their money alongside other investors and reap the rewards of residential property.
Why invest in a property fund?
The list is long for the advantages of investing in a property fund. Here are just a few of the pros:
- It’s a set and forget investment
- You can leverage the expertise of property professionals
- The minimum investment amount is likely far less than investing alone
- You can invest in property with far larger price tags (and potentially receive far larger returns)
Want more information on investing in a residential property fund? Find it here.
Considering investing in 2022?
We’ve compiled a summary of what residential investors can expect if they’re investing in Australia’s real estate market in 2022. Check it out here.
And if you’re considering investing alongside an experienced property company, subscribe to our investment updates below. We’ll let you know as soon as our next high-growth residential property trusts is around the corner.
Who we are
Properties & Pathways is a dynamic commercial property investment firm. We handpick our properties throughout Australia to reduce risk and protect investor return. The strategy works. Our completed syndicates have provided investors an average annualised return of 25.91%.
