Commercial and Industrial
Commercial or industrial investing is seen as the investment for the hardened investor and not something for a beginner. While in the most part I agree with the philosophy, the principles for investing in commercial or industrial property are the same as investing in the residential market.
To determine if the investment is for you, similar questions need to be asked:
- Does the purchase have a positive cash flow
- What are the risks associated with the purchase? g. industry down turn, risk of vacancy, ease of finding a new tenant, etc
- What are the long term prospects for the area
- Is the zoning or future zoning in accordance with your requirements
- Are the leases satisfactory
- How long is there to run on the leases and are the current tenants likely to renew
- Are future rental increases written into the lease agreements and are they in your favour with regard to CPI and general expense increases
- Do you know where you stand on GST?
These are the principles an astute investor uses to invest in the commercial and industrial markets. The biggest risk associated with investing in commercial real estate is not the leases and the GST implications (which most people seem to have concerns with) it is the risk of not being able to re-let the property easily should a tenant move out.
We always recommend that you seek professional advice as this blog is for general information only