Investing in commercial property is well beyond the financial means of most people. Few can afford the large sums of money involved in buying commercial real estate. For most of us our investment in real estate is limited to where we live – our home.

But unfortunately our home doesn’t generate any income or cash flow. In fact it probably costs us money in maintenance, rates and upkeep.

Sure the financial incentive to invest in your own home is to offset the cost of renting or the capital gains you get when you sell your house if it’s value has gone up.

Most financial advisors will tell you the best investment strategy is to pay off your home mortgage as quickly as possible to reduce your debt.

But what about after that if you want to invest in property? You have a choice – invest in another residential property or a commercial property.

Residential properties can often provide a good cash flow from rent, but there are associated hassles with getting good tenants, poor tenants trashing your property and the ongoing cost of maintenance. If you like playing the role of the landlord and being involved in all those activities great! But what if you want a hassle free commercial property professionally managed.

An increasingly popular investment amongst smaller investors and retirees is through syndicated property trusts. This is known as direct property investment where smaller investors buy small parcels of a larger property through a prospectus. These projects are managed and marketed by licensed property dealers.

The prospectus is lodged with the Australian Securities and Investment Commission and the property and syndicate is professionally managed.

As of December 1999 there were 77 Property Syndicates operating in Australia with more than $1.45 billion invested. Nearly 60 per cent of these investments use borrowed money, known as “gearing”.

The benefits for investors buying into property syndicates is they can purchase relatively small parcels, for example as little as $10,000 and gain exposure to the commercial property market.

There is also the added benefit of the commercial property market often being in negative correlation with the share market so investors can spread their risk across their portfolio.

Another benefit provided is the regular income provided by syndicated property trusts, high yields and relatively low risk.

A typical breakdown of a property syndicate is the property management company buys a commercial building ranging from between $10 to $30 million and then they market this to around 300 individual investors who each have an equity subscription of between $40,000 and $50,000 each.

Simon Toovey is the Managing Director of Glenmont Properties a Perth-based property syndicate.

He says their main objective is to invest in properties that have quality tenants, long-term leases, strong returns and good potential for capital growth.

“The benefits of investing in a property syndicate are that it can enhance your lifestyle by providing a regular income, you can set and forget it,” he said.

Toovey gives the example of a typical investor profile of someone looking for secure, regular income rather than capital growth.

‘The most important aspects are location, lease, tenant and management. It’s no good having a lease when the tenant holding that lease is a $2 company. Ideally the tenant is either a government department or a major, “blue chip” corporation,” he said.

“Ultimately, it’s all about income. The right property investment should provide you with more income, income that will enhance your lifestyle, either now or in the future.”

Property syndicates may not be for all investors but they do provide an option for diversifying your investment portfolio.

Ten Tips for First Time Property Syndicate Investors

1. Set your objectives and work out a budget for how much you want to invest.

2. Understand the risk/reward tradeoff. The higher the return the higher the risk. Aim for syndicates with a return of between 8 and 10 per cent.

3. Understand the risks of property syndicates. These are a potentially unfavorable market when selling, rising interest rates, member liabilities and future potential tax changes.

4. Remember this is a long-term investment, usually around 7 years. It is “illiquid”; meaning you can’t take your money out of the investment during this time.

5. Identify investment syndicates with quality property in a good location with potential for capital growth. Ask for a copy of any independent investment and ratings reports.

6. Analyze the lease arrangement. Ask how much rent or income will the property produce, what the income growth is and how long will this continue?

By: Thomas Murrell

About the Author:
Thomas Murrell MBA CSP is an international business speaker, consultant and award-winning broadcaster. Media Motivators is his regular electronic magazine read by 7,000 professionals in 15 different countries.

You can subscribe by visiting http://www.8mmedia.com. Thomas can be contacted directly at +6189388 6888 and is available to speak to your conference, seminar or event. Visit Tom’s blog at http://www.8mmedia.blogspot.com.

Buying property is really a tricky decision to make. Investments are really very difficult to cough on something very expensive, when you can’t really see the outcome at this point of time. Buying commercial property becomes even trickier. Whenever you are buying a commercial property, you have different assumptions in mind. There are different indicators which contribute to the development of a commercial real estate. First of all you should determine the level of investment which you can make. Payment is also made through two ways. Either you pay the entire amount for the property lump sum or you just get it mortgaged. This depends on the pattern of cash flows you have and the priorities you have for the future. If the interest rates prevailing in the market at this time are higher, then it is better to pay in case.

On the other hand if the interest rates are low then going for payment of cash is not good. It is then better to pay through mortgage. If you are already running a business then it is better to use the mortgage option. This will help you in two ways. Number one benefit is that you will be able to charge it against depreciation and that would in an indirect impact result into reduced income, thus reducing the income tax you have to pay. Second effect is that you would also add the interest expense on the mortgage that you have to pay. By applying the mortgage you can now further reduce your income resulting into again reduced income. This double impact would help you save a lot of tax for your business. Buying a property on mortgage is not advisable in certain situations. You must not buy a property through mortgage if the cash flows from your business or other earning sources are uncertain. Apart from your financing constraints the other primary concern is of the future earning ability. By the development of the area you can easily determine where the area will stand in the next 5 to 10 years. It is better to invest in a commercial real estate with an assumption of return in 5 to 10 years. If you are risking your money for longer then that, this would stretch the risk level too high.

You also have to calculate the way in which you would use the building. There are many uses of the building. It all depends on the way you want to use it. You can either rent it out for residential purposes till the time comes that it has commercial value as well. This will also help you recover some of the investment to maintain the property and also to pay back the installments if you have gone for the mortgage option. Simply follow these steps and do take opinions of other trust friends in real estate as well and you are sure to taste huge success.

By: William King

About the Author:
William King is the director of Abu Dhabi Property and Karachi Real Estate He has 18 years of experience in the marketing and trading industries and has been helping retailers and startups with their product sourcing, promotion, marketing and supply chain requirements.

Florida is not only a well known vacation spot for tourists; it is also the business capital of the country. It is a place where there are business opportunities that are waiting for those entrepreneurs who want to set up their own business. In order to get the desired profit and success in the chosen business field it is important to have your own Florida commercial real estate that will provide everything for your business needs. But before you own one, you have to undergo through some important process. Here are some of the important factors that you need to determine in order to get the right commercial property for your business needs.

Nature of the Business

It is not easy to put up your own business. It is important that you have to think the kind of business that you want to start up. You have to make sure that it is the right type of business that you want to pursue. You have to think all over again and decide for yourself if you have the right skills and capabilities to manage that particular business. And aside from this, it is important to check out the nature of the business so that you will have the idea of what kind of Florida commercial real estate space you are going to buy.

Business Location

When buying a Florida commercial real estate property it is important to check out all the possible location where you want to locate your business. It is important that the location is accessible to your target market and also accessible to all types of vehicles. This is to ensure that your business can be easily access by the people.

Budget

Whatever you purchase it is important to have an idea of how much will it cost you. It is important to check out your budget before rushing to search for the right property. You have to determine the amount of money that you can safely allocate for the property to avoid compromising your budget that is intended for the operation of the business.

Seek the Help of the Realtor

If you are just a beginner in investing in Florida commercial real estate, it is better to seek the help of a realtor. You have to ask the service of the realtor who has been successful in acquisition process. In this way you are sure that you will be succeed in buying the right commercial property that will cater your business’ needs.

By: Allison Manalang Ayson

About the Author:
Florida Commercial Real Estate

Allison Manalang Ayson writes for Jump2top.com – SEO Company