In the area of ??commercial property, Scott O’Neill is a strong advocate. From a cash flow perspective, yields can be considerably higher than those for residential, long and short term. Part of his philosophy is to educate investors about the benefits of putting their money in the trade and to reassure them about the risks involved.
"There is more due diligence compared to residential properties, but when you do it well, the returns are much higher"
"Many investors are discouraged by the lack of understanding, the larger deposits required – typically around 30% – or the fear of a long-term vacancy," says O’Neill.
None of these challenges are necessarily insurmountable, and the "fear of vacancy" usually comes from one or two horror stories from those who have never owned one. previously owned commercial property, says O'Neill.
"The truth is that I can give you a lot more horror stories about residential properties," he says.
"Investing in the wrong market at the wrong time can be a serious problem – just look at what happened to property values ??in Perth or some other mining towns."
In contrast, a well-selected, high-yielding commercial property has the capacity to pay for itself in 10 years, explains O & # 39; Neill. These benefits are possible because when you invest in a commercial building, you are less sensitive to changes in the market. As explained in last month's column, the value of the property is usually based on the strength of the attached lease. As long as you exercise due diligence, commercial property can almost immediately prove to be a stable source of passive income.
"In addition to the profitability of the property, you will also benefit from capital growth and rent increases," says O’Neill. "There are always risks, as with any investment, but they are not necessarily where most people think they are."
O’Neill is also positive on the interest rates associated with commercial property; they usually start from 3.5%, depending on the lender and whether it's fixed or variable, he notes. Although the required deposit tends to be higher, it does mean that repayment of the loan is easily achievable with good financial planning.
"If you look at the figures for an example of commercial property [see boxout] you will see what happens when you deposit the positive cash flow in debt," says O’Neill. "You can see that after 10 years, you have now established a solid passive income of up to $ 65,000 a year. Not bad for a purchase price of $ 700,000! "
O’Neill points out that, as with residential property, finding the right commercial property is key.
"There's a lot more due diligence compared to residential properties, but when you do it right, the returns are much higher," he says. “Working in consultation with the right advisor can help you make the choice that's right for you, and also maximize your passive income stream in the future.”
Scott O'Neill is the founder and director of Rethink Investing, a BRW Fast 100 real estate investment company specializing in finding rare, positively oriented properties throughout Australia (commercial and residential).
Scott is an experienced and active investor who was able to retire at the age of 28. With a current portfolio of 29 properties valued at $ 18.5 million, he is one of Australia's most successful young real estate investors. O’Neill has a passion for all aspects of property, in particular helping others find great deals. Because of this passion, he founded Rethink Investing.
WANT TO LEARN MORE?
Rethinking investment helps everyday Australians to easily enter the commercial real estate market. She also specializes in assisting clients in purchasing high-yield residential properties using the same successful investment strategy. Call 1300 965 551 or visit www.rethinkinvesting.com.au
Main suburbs:
alexandra hills
,
st kilda west
,
Leumeah
,
wiley park
,
mt lawley
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