From roll-out of multiple commercial sites to the construction of large distribution centers, commercial real estate development is big business. Development of large commercial sites involves lots of money. This also provides great opportunities for investors to accelerate their wealth.
In this article, we will reveal the secret formula that will allow small investors to make money through financing commercial real estate developers.
Financing Commercial Property Development: How It Can Pay?
In the climate of subdued level stock market returns and growing volatility, funding commercial development projects can serve as a safe haven investment instrument.
One roadblock for small investors, who constitute around 83 percent of investors in the Australian property market, is the high price.
Large commercial projects cost millions of dollars. But, how can small investors make money from financing commercial property development?
One way you can make money is through financing the commercial property development project through the vehicle of property syndicates.
What are Property Syndicates?
Proper syndicates are direct real estate investment companies. The companies serve as a vehicle for small investors to pool their money for investing in large commercial projects. Investors make an initial investment to a commercial property development scheme. In return, they become joint-owners of the project.
Through the commercial property investment medium, investors can invest in:
- Large retail property projects
- Commercial property projects
- Industrial property projects
Investors receive income generated from the invested projects during the syndicate life. Also, the investors get back their invested capital upon dissolution of the syndicate.
What are the Benefits of Investing through Property Syndicates?
This pooling of money through property syndicates companies like Stamford Capital Investments can provide various benefits to the investors. By pooling money, small investors are able to own mega-projects that they would not be able to afford individually. Investors can get into the market quickly to meet the existing demand. With a property syndicate, you can be able to invest in multiple projects each of which is worth millions of dollars.
Another benefit to the investors from investing in large commercial projects through property syndicates is that they can diversify their portfolio. Since the required investment amount is low, they can easily spread their investment amount over multiple commercial projects. This is something that is not possible for small investors if they were invested directly.
Lastly, investing in property syndicates will help you to earn more income than if you had invested directly in the projects. You won’t have to pay any cost of maintenance or upkeep of the property. Also, you don’t need to hire a professional team of accountants, realtors, and others to manage different aspects of the commercial property investment. The property syndicate will handle all matters related to the property development. You will be able to let the property syndicate company such as
Financing commercial real estate property development is one of the most lucrative investment options. Investors can be able to not only generate more cash flow but also diversify the risks through this investment platform.
Ways for Investing in Commercial Property Without Spending Millions
Why would you want to make a million dollar investment in commercial properties if you can make a less expensive investment? Real estate investors who are ignoring commercial properties for making an investment are actually missing a lot of opportunities, such as higher rental yields than can be earned in comparison to yields from residential properties.
Such opportunities are attractive for people who live off investment income, like retirees. But the problem is that most of the people believe that investing in commercial property is too much of hard work and also very expensive. But the truth is that there are ways to get into the commercial real estate investment without making an expensive investment. Let’s see how that can be done.
#1 Australian Real Estate Investment Trust
One of the easiest ways to invest in commercial property in Australia without having to spend millions is to buy an Australian real estate investment trust, also known as A-REIT, or you can buy a real estate exchange traded fund (ETF) on the ASX. This way you only have to spend $500. But the problem is that the property investments that are listed on the ASX are always affected by the volatility of the share market because they are not direct real estate investments. However, you can get a direct exposure if you invest in unlisted funds. Doing so might not be as easy as it was with A-REITs and you will also have to outlay a larger sum of money, ranging from $10,000 to $50,000.
#2 You Can Co-Invest with the Other Professionals
This is an option available for investors seeking out opportunities for making a passive investment in commercial property. You can seek out other professional investors and groups that have proven track records of sound dealings. This is one of the best ways of investing in commercial property because it gives the investors an ability to reduce the risk because you team up with some of the tested veterans.
#3 Professional Advice
The chairman of Property Investment Professionals of Australia, Ben Kingsley, said commercial property investment is the domain of more sophisticated real estate investors. But he also said that small investors can also still benefit from the same commercial property investing if they really know what they’re doing. It means that small investors also have a chance of investing in commercial property if they seek the counsel of expert professionals. For further details, you can visit stamfordcapital.com.au.
#4 Finding the Right Property
You can always buy a shop or an office directly often at a cost far less than the cost of a private or residential property. For that, you would have to hire an experienced lawyer who’s familiar with commercial real estate investment and commercial property leases.
If you invest in a commercial property through one of these ways, the chances are you will earn great profits. It’s because, with commercial leases, tenants have to make the property fit for their use and for that they have to add value to the property which benefits the landlord financially. Also, with commercial properties, the rental yields are high and the leases are longer.