What should you look for in a commercial property investment?

By Greg Bell

Investing in Gold Coast commercial property requires more than a quick look around the premises. You need to do your due diligence on the property, and make sure you understand how you'll get a return on your investment. 

Here are some areas to think about before choosing your investment.

Quality of tenants

Find out what the tenant history is like so you can ask questions if the current owners have struggled to retain occupants. Long-term, hassle-free tenants make your life much easier and so are worth looking out for when searching for the right property to invest in. 

Long-term or not, it's also worth checking out what kind of business they're in and how sustainable they are so you can anticipate any potential issues.

Look at whether you're able to rent the property to multiple tenants going forward. A multi-tenant lease is helpful to ensure that you get a portion of rent coming in between one tenant leaving and another arriving. 

Think beyond rent

While rental yield is important to check when investing in a commercial property, there's more to it than just the regular payments. Check the current rental agreement for any clauses that could affect your income. Some contracts have rent linked to tenant profit meaning increases are only allowed if their business is generating a certain amount of income. This isn't all bad news, but you need to check that the agreement fits with your investment plans. 

You'll also want to check what outgoings are covered by the tenant – such as water or electricity bills, and what their obligations are in terms of returning the property to its original state when they do eventually vacate.

Research the area

It's about location, location, location! Any good business owner would do their research before opening a shop or office and you should keep in mind the same sorts of questions. Will you be able to attract the tenants you want? Is there sufficient footfall that a variety of businesses could survive in your location? If people are likely to travel via public transport – are the links sufficient?

In addition, check out the commercial real estate situation in that area. You want to make sure that vacancy rates are in check so you can remain competitive. Meanwhile, is the condition of your potential property comparable to others going for the kind of rent you need to attract?

For expert guidance in finding a Gold Coast commercial property that will provide the return you need, talk to the team at Ray White Surfers Paradise.

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