4 reasons to give commercial properties a second look

Burgess Rawson Managing Director Ingrid Filmer said this came as no surprise because, in her opinion, commercial real estate offers the best returns of any real estate sector in the country.

“This is a change that is paying off for people who have dipped their toes into the business of ‘fix and forget’ long-term leases,” she explained.

Ms Filmer acknowledged that “Australia’s dream of homeownership is stronger than it has ever been,” but when it comes to building an investment portfolio, she believes residential property is away from commercial property.

Here is the information on the benefits of investing in commercial properties, as given by Ms. Filmer:

1. No need for technical knowledge and excessive investments

“There seems to be a widely held misconception that commercial real estate investing is for the ultra-rich, or those with a technical understanding of a particular business sector, which couldn’t be further from the truth. “, revealed Ms. Filmer.

She gave a hypothetical example of a good quality investment that will only cost $ 500,000 to $ 1 million. Such price points, said the CEO, are “ideal for investors looking for an alternative to the overheated residential market”.

2. Highest yields in the Australian real estate sector

Using the example of number one, Ms. Filmer said such an investment could bring in between $ 30,000 and $ 60,000 per year.

To further illustrate, she mentioned a recent take-out store that was sold in Altona, Victoria, for $ 760,000.

“The property was bought at 31% less than the average price of a home in this suburb of $ 1.1 million, and will yield a return of 4.06% – or $ 30,900 – per year over the course of the seven-year lease, ”Ms. Filmer said. calculated.

3. Long-term investment in high-performance properties

The crucial factor here, according to Ms. Filmer, is putting your money into performing investments and essential service assets like daycares, fast food outlets and gas stations instead of leaving your unproductive money in bank accounts or trying your luck in bloated residential real estate markets.

“Critical service assets are those that are able to function at any time, even during shutdowns, and typically demonstrate a high level of resilience to market cycles such as daycares, medical centers and gas stations,” said she declared.

4. Long term lease with less headache for investors

Ms. Filmer added that commercial properties “generally have long-term rental agreements ranging from three to five years and tenants are responsible for all costs, repairs and improvements.”

While residential property leases are typically renewed every six to 12 months and “the landlord is responsible for all costs, maintenance and repairs,” Filmer said.

So how can a potential investor venture into the commercial real estate market?

Ms. Filmer advised “start small, stick with resilient asset classes, and watch the auctions. As with all investments, it’s important to first get the right financial advice and consider what’s best for you and your personal situation.

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Property refers to a tangible or intangible item over which an individual or business has legal rights or ownership, such as houses, cars, stocks, or bond certificates.

4 reasons to give commercial properties a second look



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Last updated: January 12, 2022

Posted: January 13, 2022