Rethinking Commercial Property
Ever thought about investing in commercial property? Here’s why it’s a good idea.
Scott O’Neill is a professional property investor, best-selling author and the Managing Director of Rethink Investing, Australia’s largest and most experienced buyer’s agency for commercial property investors. Rethink Investing has helped over three and a half thousand clients purchase over three billion dollars in real estate since 2015. With a focus on direct purchases of commercial properties, his expertise and experience in the industry have contributed to the growing popularity of commercial property investments over residential properties.
Scott joins Mark on this episode of Property Insights to explore the features of the commercial market. Their clear analysis and considered examples are tailored to help those who are starting out in commercial investments and looking to expand their knowledge of developing opportunities in the current market.
Key Takeaways:
- Commercial property investments can offer better cash flow compared to residential properties, with net returns of 6-8%. Demand for commercial property has increased, with more people transitioning from residential to commercial investments due to lower yields in the residential market.
- The commercial property environment has remained relatively stable throughout the current economic period, particularly when compared to the residential property market. Scott suggests there’s a “good outlook” as properties have seen significant growth due to limited supply and increasing rental returns.
- “Buy quality”: Scott says to look for good yield, good growth and diversify into different sectors with a focus on areas with ongoing demand.
- Scott’s tips? While industrial investments are “on fire”, they’re harder to access. Central retail, medical research, and certain office space locations are positive growth areas to consider. With different sectors performing differently, think of it like stock and pick accordingly.
- Mark highlights that, while lenders are looking positively towards borrowers in the commercial market right now, it’s important to be aware of lender requirements and key features of the market (such as ‘capitalisation rate’ and ‘yield compression’) before starting out. Scott takes you through all of the important features and terms you need to be aware of when starting out with commercial property investment.
