5 reasons we won't be purchasing a commercial investment for you

At Rethink Investing we have a strategy which we strictly adhere to, each and every time we look to purchase a commercial property for our valued clients. If a property doesn't qualify, we simply will not purchase it.

1. Diversification – If it can't be easily 're-let' for multiple uses, or by multiple tenants, then a commercial property, is in our eyes, considered higher risk. In these covid-19 times, for instance, the commercial properties which are 'safe' are the medical centres, shopping centres, and industrial properties. Within these three categories, there's a variety of tenants that could use these properties. For example, a 500m2 industrial property could be leased to an:

Electrical engineering company

Tile/flooring business

Kitchen door manufacturer

Cool room storage business

Solar panel distributor

A furniture storage business

Any type of online business needing storage

I could go on for 100’s of examples but these are just some of the types of tenants we found for our clients in the last 21 days at Rethink Investing.

2. Fair rent – If there's no room to increase rents, then as long as the property has other favourable features, these will be taken into account to balance this out. If we find that the property has inflated rents or 'square metre rates' that don't add up, we'll avoid this property unless it has a very long lease.

3. Market research – If the property has a retail tenant and if retail is currently suffering in the current climate, or the property is in an area with known supply chain issues or an area with high vacancy rates, it will be an automatic 'no'.

4. Yield – Any less than 6.5% net on a commercial property, and we're not interested. The one exception to this rule is if the property is valued at less than $250,000.

5. Capital city – Most commercial properties benefit from customers, passing traffic, and infrastructure. Removing these things means a riskier investment. Capital cities offer you a better chance of these fundamentals remaining strong.

To speak to one of our property strategists about how you can get started investing in commercial property please email [email protected],

Call 1300 965 551 or head to our website

Scott O'Neill

Director - Rethink Investing