When it comes to investing in property in Geelong or elsewhere, the debate continues to rage between property investors as to whether commercial or residential property is the better investment.
Whilst at Tick Box Conveyancing, we don’t pretend to be financial advisers, we see many of our Geelong conveyancing customers pick up some excellent properties on both sides of the coin.
And when it comes to commercial property, whether buying commercial property in Geelong or elsewhere, there are some things you need to take into account before signing on the dotted line.
But before we get to our tips for buying a commercial property in Geelong, let’s look at some of the pros of investing in commercial property.
Benefits of buying commercial property in Geelong
The average rental return for commercial properties across Australia’s capital cities is much higher than residential properties. In contrast, it’s not uncommon to get anywhere between 8% and 12% gross rental yield for commercial properties.
Commercial leases tend to be much longer than residential ones, and tenants also tend to stay longer, primarily when they’ve invested capital customising the premises.
Landlords of commercial properties don’t have to worry about rates and other outgoings like water and body corporate, as the tenants pay these.
Smaller deposits are required when investing in commercial properties, making it a more accessible option for those with less capital. For example, a car park can cost as little as $80,000, whereas a small bed-sitter costs around $400,000. This makes commercial property a more affordable investment option for those looking to get into the market sooner.
Of course, it’s not all rosy…
Risks to consider when buying a commercial property in Geelong
When it comes to commercial properties, they may look attractive on paper, but there are potential risks you need to be aware of before investing.
Commercial properties are sensitive to economic conditions – when the economy is strong, businesses flourish, and demand for commercial properties generally rises. Still, when there’s an economic downturn, demand for commercial premises usually falls.
Another thing to consider is that it takes longer to find a tenant once it becomes vacant. Commercial properties attract long-term leases of three to five years or more, but it can take longer to find a tenant.
This means you will need to cover all the costs during this period. So, before investing in a commercial property, ensure you understand these risks and are prepared for them.
As with any investment, it is always a good idea to seek the opinion of professionals before making any decisions.
Things to think about when buying a commercial property in Geelong
If you’ve considered all the factors and decided that investing in a commercial property in Geelong is the right thing to do for you, then here are five big tips you should consider.
- Do Your Research
- Get Pre-Approved for a Loan
- Talk to Local Commercial Real Estate Agent
- Have a Professional Inspection Done
- Partner with a professional local conveyancer
1. Do Your Research
The first step in buying a commercial property in Geelong is to do your research. You should have a good understanding of the local market and the type of property you are looking for.
Additionally, it is essential to be aware of any zoning regulations that may impact the use of the property.
2. Get Pre-Approved for a Loan
The next step is to get pre-approved for a loan. This will give you a better idea of how much you can afford to spend on a property.
It is also essential to shop around for loans, as different lenders will offer different interest rates and terms.
Remember that commercial properties loans are very different from residential properties. Work with a professional mortgage broker who can help you find the right loan for your needs and also help you understand those differences.
3. Talk to a local Commercial Real Estate Agent
Hiring a real estate agent specialising in commercial properties is also a good idea. A good agent will be familiar with the local market and can help you find the right property for your needs. They can also assist with negotiating the purchase price and terms of the contract.
4. Have a Professional Inspection Done
Before making an offer on a property, it is essential to have it inspected by a professional. This will help identify any potential problems that could impact the property’s value or its suitability for your needs.
5. Partner with a professional local conveyancer
Conveyancing is the legal process of transferring property ownership from one person to another. A conveyancer is a professional who specialises in this area of law.
Conveyancing can be a complex and time-consuming process, so it’s important to choose a conveyancer who is experienced and knowledgeable about the laws in your state or territory.
When you’re buying a commercial property, it’s especially important to use a conveyancer who understands the unique challenges of this type of transaction. That’s where Tick Box Conveyancing comes in. We’re a Geelong-based conveyancing firm with more than 100 years of combined experience helping our clients navigate the complexities of commercial property transactions.
We’ll work with you to make sure the property you’re interested in is the right fit for your business, and we’ll handle all the legal details of the purchase so you can focus on running your business.
Contact us today to learn more about how we can help you with your next commercial property purchase.
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