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Choosing to invest in your first commercial property such as warehouse or shop can be a great way to get your foot in the door of the world of real estate investments in Sydney. Also, being armed from the start with the right information, attitude and understanding can help you to make a success of your investment and build on it as you go.
Have a look at some tips we prepared for you today, to help become successful in the commercial property market in Sydney:
Understand the influencing factors
The commercial property market has some similar drivers to the residential one, but it also has some additional influencing factors involving local economic conditions. Some of the demand factors in the commercial world include:
Location – an area with a strong local economy is likely to increase demand for commercial services and properties.
Population and demographics – these factors will also affect the demand. For example, a region with strong population growth and a high proportion of younger families is likely to lead to an increased demand for food outlets, retail shops and childcare centres, while one with an ageing population may result in a higher demand for retirement accommodation and health services.
Local infrastructure – the construction of roads and other major services can lead to a greater demand for commercial properties. Also, don’t forget to check plans for future infrastructure in regions you are planning to invest in.
Get to know the practicalities and financial side
There are many aspects you should consider here, such as:
Property size, age and condition – these factors are likely to have a strong impact on the capital growth. For example, a larger property may be more difficult to lease than a smaller one and in the same way, an older property may face competition from construction of newer facilities.
Lease agreements – commercial properties usually come with leases that can run for up to 10 years, which is considerably longer than most residential lease agreements. It’s very important to fully understand what is contained in your agreements when it comes to rental amounts, terms, renewal options and who is responsible for what in terms of maintenance and operation costs.
Property manager – a professional property manager is vital to ensure the smooth running of your investment property.
Finances – some of the aspects here include current interest rates, your capacity to make payments on time and budgeting for capital repairs and potential vacancies.
Have the right attitude and approach
In any commercial property investment, you make it’s important to have a business-like and professional attitude to treat your lessees as business clients. You should also work towards taking on an objective and practical mindset when seeking out properties to add to your portfolio, and to remain open-minded to opportunities that come your way.
Also, don’t forget about the importance of commercial property valuations so you can adjust your investment specifications according to your financial abilities.