All things commercial

Shadforth Lythgo has just completed another commercial development, this time at beautiful Coolum Beach. We also did a fit-out for one of the tenants – a bakery.

Junction Road, Coolum Beach.

The Sunshine Coast continues to thrive as more and more people decide to make the ‘sea change’ and move here. As a result, commercial developments are also flourishing as new businesses start up.

Bakery fit-out.

While many people are aware that the residential property market is a solid investment, not as many look to commercial investment as a pathway to financial security.

Newly finished commercial premises at Coolum.

In this week’s blog, we thought we’d take a look at some of the principles behind successful property investment.

1. Make sure you can afford it

There are always costs associated with any investment. With a commercial investment, there are the initial funds needed to purchase the property but you also need to have the cash available for contingencies, such as lag times in securing good tenants.

From the air.

If you invest in a new property you will have depreciation benefits that will help with cashflow but keep in mind most depreciation occurs in the early years of investment.

Securing long-term tenants is important.

2. Do your homework

The old adage – there’s no such thing as a free lunch – is important to remember when seeking advice on commercial investment. Do your own research into the local market and beware of taking advice from the vendor or their associates. You can also seek advice from an independent professional.

Ready for business.

3. Think about what level of involvement will work for you

All investments are different. Some commercial developments can be managed by a third-party and you can almost set and forget and look forward to the income. Others properties will require your time and attention, owning a bakery for example. Think about what your goals are and whether the investment works for your circumstances.

Finding a good position is important.

4. Income versus capital growth

While a commercial investment can be an excellent income-producer, a residential property may provide better capital growth. If you are looking to create an income stream, a commercial investment may be the most suitable way to go.

The property from overhead.

Your solicitor or accountant can help you decide on the best form of ownership for your circumstances. Whether you decide on a partnership, company, trust, or self-managed super fund, the form of ownership you choose will have implications with the tax office.

During construction.

5. Unlike buying a home, it’s not an emotional decision

Buying an investment property is very different from buying a home. You don’t have to live in it! You should make your decision based on your financial situation, your research, and the suitability of the property for long-term tenants. You don’t have to love it, you just need to be assured of its income-producing capacity.

Long-term tenants are the goal.

In a nutshell

• Affordability for the long-term is vital
• Do your research and seek independent advice
• Make sure the investment works for you – the level of involvement you want and your goals
• Decide on the best form of ownership for you – seek the advice of a solicitor or accountant
• Keep your emotions out of your decision

Sunshine Coast: a growth area.