Investing in commercial property is well beyond the financial means of most people. Few can afford the large sums of money involved in buying commercial real estate. For most of us our investment in real property is bound to where we live – our home. But our home doesn’t create any income or cash flow. Actually it probably costs us money in maintenance, rates, and upkeep.
Sure the financial incentive to purchase your house is to offset the cost of renting or the capital increases you get when you sell your house whether it’s value went up. Most financial advisors will let you know the best investment strategy is to pay off your home mortgage as fast as possible to lessen your debts. But what about after that if you want to invest in property? You have a selection – spend money on another home property or a commercial property.
Residential properties can often provide a good cash flow from rent, but there are associated inconveniences to get good tenants, poor tenants trashing your premises and the ongoing cost of maintenance. If you like playing the role of the landlord and being involved in those activities great! But what if you would like a hassle-free commercial property managed professionally.
An ever more popular investment amongst smaller traders and retirees is through syndicated property trusts. That is known as direct property investment where smaller investors buy small parcels of a more substantial property through a prospectus. These projects are marketed and managed by certified property dealers. The prospectus is lodged with the Australian Securities and Investment Commission and the property and syndicate is professionally managed. 1.45 billion invested. Nearly 60 per cent of these investments use lent money, known as “gearing”.
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10,000 and gain contact with the commercial property market. Addititionally there is the added benefit of the commercial property market often being in negative correlation with the talk about market, so investors can spread their risk across their stock portfolio. Another benefit provided is the regular income provided by syndicated property trusts, high yields, and relatively low risk.
Simon Toovey is the Managing Director of Glenmont Properties a Perth-based property syndicate. He says their main objective is to purchase properties that have quality tenants, long-term leases, strong comes back, and good prospect of capital development. Toovey provides an example of an average investor profile of someone looking for a secure, regular income rather than capital development. The main aspects are location, rent, tenant, and management. Ultimately, it’s about income.
Variable cost is usually to be incurred if there is production only. Variable cost is more or less with respect to the increase and decrease in the volume of production. Variable cost is otherwise known as, prime cost. Labor Thus, recyclables, chemicals etc. are the factors which may be varied with the change in output readily.