Is commercial property a good Investment in our post-COVID climate?
Tuesday, December 15th, 2020
It’s a new way of living that has seen once stable ways of doing business flip completely, and the aftermath is yet to be fully realised.
By working at home instead of the office, the once-stable industry of commercial office space has taken a hit and for anyone interested in commercial property investment, it’s a case of watching and waiting.
COVID-19 has seen the rules change and to help settle on your own property investment strategies, there are some important factors to consider.
- Don’t jump in. With thousands of businesses begging landlords for rental relief, the sad fact is that many businesses are shutting up shop for good. Yes, that might mean you access a commercial property at a low price but unless you have the financial resources to support you though what could be a lengthy period of no rental income, investing in commercial property may not be a smart move for you. Of course, it does depend on the tenant. With some sectors, such as mining, supermarkets and logistics doing better business than ever, there are still opportunities to attract reliable tenants – but it does depend on your property and its location.
- Be conservative. Anyone with a current commercial property investment portfolio, or someone keen to invest for the first time, should consider that rental income will be reduced – possibly for quite a while. Being prepared for all eventualities is a smart approach as an investor.
- Ask for a delayed settlement. If you are adding a new asset, ask for a six-month settlement delay from the date your contract is signed. It may just be the breathing space you need and it offers you the benefit of buying at today’s price.
- Refresh your investment strategy. Investing in any property is never ‘set and forget’. In the post-COVID world of commercial property investment, this is particularly true. Crunch your numbers with your accountant and your mortgage broker to see what you might need to do differently to evolve and take advantage of potential opportunities.
- Focus on strengthening relationships with your tenants. The reality is that many small Australian businesses are struggling. By understanding the needs of your tenants, you could explore options to help you both through tough times – and create a positive strategy that is sustainable and helpful for everyone involved.
- Talk to your lender
- By keeping lines of communication open, either in person or via your mortgage broker, you can potentially access better deals and benefit from the power of negotiation and greater flexibility.
For more information on smarter ways to invest in commercial property, talk to our commercial property specialists at Loans Actually today.