Commercial Property Investing: How To Formulate Your 8 Key Objectives For Success It

Commercial Property Investing: How To Formulate Your 8 Key Objectives For Success It

You may choose to alter the specific order of importance you adopt for the following Objectives, in order to make them fit within your overall investment strategy.

Commercial Property Investing: How To Formulate Your 8 Key Objectives For Success It


Buy let’s review What are considered as the key Investment Objectives… those that seem to have stood the test of time.

1. Lasting

Lasting value is a property’s ability to remain attractive over the long term; and so, this should be your primary objective. As you’ll appreciate, this will involve an knowledge of market trends … how they will affect different property sectors, and over what time frame.

2. Regular Cash flow

Alas, a well-located investment (with no assurance of ongoing income) will not be of much help to you. Always look at the property’s ongoing leasing potential, [not just during|well past} your initial years of ownership.

3. Steady Growth

Although inflation seems more or less under control, you do need to ensure that each investment will provide you with steady capital growth. And this is a combination of rising rents and a falling capitalisation rate.

4. Extra

Often this can come from a {creative|clever| change of use; or merely from being able to sub-divide a larger property into smaller individual titles. Other times, you may be able to obtain a town planning permit for some higher and better use.

5. Funding Appeal

This will include vital elements such as a strong cash flow, long tenancies, low maintenance needs and being well-positioned. Learn to view each one of your potential investments from a lender’s point of view.

6. Future Collateral

Being able to borrowing the money you need upfront is obviously important. However, you also need to look ahead – to when a core part of your portfolio should be viewed as a long term hold – which will provide comfort to your financiers, and you with the opportunity to borrow even more in the future.

7. Cost Control

You should look to acquire properties with net leases – where your tenant is responsible for all the building operating costs. Because things like your rates, taxes, maintenance, service contracts and so on can suddenly increase – and that can adversely affect your overall return.

8. Tax Benefits

Tax benefits should be considered as a secondary motive for making any investment decision. You can generally obtain {worthwhile|significant| depreciation benefits. But the {investment|deal| itself needs to be viable, before focusing upon potential tax benefits. Otherwise, you probably shouldn’t proceed.

By John Benson

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