Phillip King, a long-time investor, faced a negative setback that could jeopardize his residential investment goals – he turned to commercial real estate.
With a multi-million dollar portfolio and considerable capital, he shares his best advice for those wishing to invest in non-residential investments:
1. Search shops in the middle of an ant nest. Business ventures thrive where there are customers to have. "It takes a lot of people around the store to make sure the tenant's business is busy and well supported," says Phillip.
2. Choose on-demand service companies. Phillip's preferred tenants are hairdressers, coffee shops, bottle shops, restaurants and medical centers, generally supported by a loyal customer base or meeting the basic needs of the neighborhood.
3. Make sure all expenses / expenses are accounted for. "A store for sale should detail all outgoing expenses in the seller's information memorandum. This ensures that the amount of net rent shown includes all expenses, "advises Phillip.
4. Durable charge for this type of business: To prevent your tenant from asking for a rent reduction or a lease default, look for rents paid for neighboring stores to make sure that the current rent is sustainable.
5. Prioritize newly constructed properties over old ones. "The newer building will require less maintenance and, most importantly, it will offer a better depreciation schedule for tax benefits. It will also have better potential for capital growth! "
To learn more about how Phillip has built his substantial wealth with the help of commercial property, read the full article in the May 2019 edition of Your Investment Property magazine.
Available at Coles news agencies and supermarkets from April 11 to May 9 or download the magazine now.
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