Thinking of getting involved in commercial property

Commercial property can provide for much higher rental returns. A strong economy is fundamental for any thriving commercial property investment. While commercial property looks compelling on paper, there are possible risks you need to be aware of before investing. Acquire complete knowledge about profitable property investment and learn property business leadership packages.

Another pro/con (its on both sides of the coin) – is that the finance is different to normal residential lending. In terms of deposit requirements, costs and the like it can be more onerous and restrictive, but by the same virtue being a commercial loan means the way borrowing capacity, income verification etc is treated differently which can potentially free up significant borrowing capacity to keep buying property when your capacity may have been exhausted or ineligible with residential lending.

Some examples which I’ve done which would not have been possible under resi easily:

*Entrepreneur who flips businesses, significant cash but no ongoing income through a job or business – able to invest into over 4.5mil in commercial property without the lenders batting an eyelid
*$1mil cashout approved within 24 hours without any required documentation other than a completed valuation for a self employed client with 5 businesses – imagine the tomes of paperwork for a normal deal
*blend of 100% LVR of commercial + business lending for a business, allowing them to purchase a property to work from, then receive secured funding for fitout and cash flow management

Horses for courses – but I do think it’s a genuinely productive proposition to consider commercial property when nearing the end of your traditional borrowing capacity and wanting to extend that bit further.

Yes definitely – there’s a number of options in the commercial space which would allow you to be able to buy even though you’re in a new commission role.

Not high at all – depending on the specific deal I’ve been writing similar deals for circa ~5.5% and better features than the usual Big 4 loans.

To get something like this over the line, you definitely need a tenant in place with AT LEAST 12 months remaining on the lease.

Best to get specific advice on your exact scenario so you can know exactly what is possible for you, what the requirements are etc.

Great input here all around. I would only add that it’s best to first decide whether you are primarily an income investor or a growth investor. Commercial is great for income, but not so great as a growth asset. That said, I can understand why you’re looking elsewhere than Aussie residential property for generic growth.

Might be worth looking at the interest rates in terms of commercial lending – this has come down heavily in recent times with commercial rates as low as the low 4’s right now for prime deals, up to the mid 5’s for the more out of the box scenarios. We’ve been knocking through a lot of a commercial product for 4.29% for deals which tick all the right boxes for the lender.

Prime = top quality. Ie full income verification, leases with 1+ years on them, quality commercial property (not a run down petrol station in Timbuktu).

4.29% variable or 3 years fixed, 70% LVR,valuation fee waived, discounted application fee.