Advanced Investment Strategy: Commercial properties
Over time property investors may seek to purchase commercial assets instead of residential real estate.
- Office space
- Warehouse space
- Petrol stations
Why is it attractive:
- Diversification – over time, having your eggs in the residential investment market may not make sense. Commercial assets are reasonably easy to finance and secure, offering similar leverage benefits to residential real estate with diversification of asset class.
- Yield – Commercial yields are usually better than residential yields.
- Net yields usually provided – the tenant usually pays outgoings like electricity, strata, etc. This means the yield may be net of costs. This offers property investors the benefit of simplicity.
- Larger asset values – property investors can purchase larger land contents, higher value dwellings with large rent rolls. This is attractive to those who are time poor and high net worth individuals.
Longer term tenants – tenants are usually secured to long term leases. This stability is attractive for advanced property investors, seeking cash flow over long periods of time while owning land.