Your commercial property investment strategy
Commercial property makes a great investment.The yields are good (sometimes great), the market’s pretty consistent, investments can be short or long-term, and longer leases mean added security and less hassle for property owners.
However, like any investment if you want it to perform well for you, then you’ll need to have a strategy. Having a strategy means you know what the big picture looks like and what the best outcome looks like. It also places you in a better position to respond to foreseen and unforeseen events, like market fluctuations, tenancy issues and
Start by looking at your goals. Why are you investing? Is it for short or long term gain? Is it to diversify against existing investments? Is it to provide a retirement nest egg? Is it to provide security for your business? There are many reasons to invest in commercial property, but chances are you can pick one that makes the most sense to you. This should form the cornerstone of your investment strategy.
Understanding what you want out of your investment will help inform the rest of your strategy including what to buy (do you diversify or find a niche?), when to buy (what is the market doing?), where to buy, and what to do with your properties once you’ve bought them (how long will you hold it for, what sort of tenants will you lease to?). How you buy is also important – will you set up a company, a trust, buy in a partnership or a syndicate, and how will you finance your investment?
Finally, the most important thing a well-thought-out strategy will do is take the emotion out of the equation. When it comes to property, many investors make the mistake of buying on emotion – they fall in love with a place, it reminds them of somewhere, it has sentimental value or it just had a nice feel to it. While, some may still make a good investment, none of these are sound reasons to make a purchase. The last thing you want is to be left with is a lemon, and unfortunately one bad lemon has the potential to spoil a whole tree.