Trusted Consultants ~ Part 2:
Financing the Deal

LAST WEEK, I promised to reveal those key Consultants to whom I’d be prepared to entrust my own property deals. So, let’s progress a little further with that.

Perry Finance are problem solversNo doubt you will have experienced your share of problems, when it comes to arranging the finance for a recent purchase you may have finalised.

As you’re probably aware, most vendors are unwilling to enter into a contract in the current market, containing a “subject to finance” clause. Because it would simply tie up their Commercial property, without any certainty of a sale. [Read more…]

Building Your Team of
Trusted Expert Consultants

Building your Consulting TeamAS YOU know, Property Edge Australia is there to help you in identifying and negotiating the actual purchase of your next Commercial property.

However, you still require certain other key consultants, in order to make every deal really work for you.

And those consultants need to be thoroughly trustworthy.

As you can appreciate, I have had the opportunity to work with a quite number of consultants, over the past 40 years. And I’ve quietly put together a close team of those ones, who have really gone out of their way to look after my Clients’ best interests.

Over the next week or so, I will reveal to you who these Consultants actually are — in the vital areas of:

  • Covering the Legal Issues;
  • Financing the Deal; and
  • Claiming your Full Tax Benefits.

Anyway, lets make a start on the first one today. [Read more…]

Top Commercial Property Investors
Always Have a Master Plan

You need a good Master Plan
When you’re just starting out, your main aim is probably just trying to secure a worthwhile property.

However, to be truly successful, you actually do need to have a Master Plan.

And to help you, here are 6 Steps towards formulating one for yourself. [Read more…]

Why Do Some Investors Fail at
Commercial Real Estate Investing?

 

Reason #1: Lack of Research

Doing your homework will ensure Commercial property success Most investors fail to properly research the market and understand the relationship each sector (office, retail & industrial) has with the local economy, nearby competition and the marketplace itself.

Reason #2: Poor Analysis

Many investors fail to thoroughly analyze and research their chosen properties as far as the overall economics, calibre of the tenant and any related risks that may be involved.

Reason #3: Lack of Commitment

Investing in Commercial property requires a reasonable degree of hands-on involvement. Some investors make the mistake of believing they can be absentee landlords. You at least need to be involved at a strategic level.

Reason #4: Over Borrowing

Negative gearing is fine. But you still need to start with sufficient equity, to ensure that your investment is not over-leveraged. Always keep some funds aside for unforeseen issues that may arise.

Reason #5: Lack of Understanding

The ownership of Commercial property needs a basic understanding of things like … tenancy law, building construction, how to add value, recognising market trends and so on. All of these can be very easily addressed.

Reason #6: Price vs Value

Some beginners tend to believe a cheap price means good value and a sound investment. Instead, you need to look behind what is being presented to discover the true underlying value.

Reason #7: Over Estimating Your Skills

To be a really successful Commercial investor, you need to build up a trusted team around you — to provide valuable input in the areas of …

  • Analysis and due-diligence,
  • Negotiating the purchase,
  • Vetting the documentation,
  • Ongoing property management,
  • Determining the time to sell.

Reason #8: Lack of Diversity

After you’ve purchased your first property, you need to widen your perspective — both geographically, and across the various sectors of Commercial property. Never simply have all your eggs one basket.


Asian Thrust will Prove Good for
Australian Commercial Property


Following the global financial crisis, the extent of trade imbalances has eased somewhat between Advanced Western economies and the Emerging Asian economies.

The gap between China’s huge current-account surpluses and America is out-of-control deficits may have temporarily narrowed. But the IMF believes the massive disparity will return, as world economic activity improves.

The ups and downs of exchange rates and capital movements are seen by the US and the Western economies as a method of ensuring a proper allocation of resources.

Whereas, it seems Asian countries view exchange rate movements as an annoying distraction from controlled expansion of their “home” economies. And amassing foreign currencies is seen as the best protection against a re-occurrence of the 1997 Asian financial crisis.

How will this affect Commercial Property Investment?

China’s stated goal of 7% growth over the next five years (plus its dependence upon coal, iron ore, LNG and nickel) will provide enormous economic upside for Australia.

On this basis, China’s contribution to global economic output will rival that of the European Union within five years; and even the US, within the next 10 years.

While Australia’s mining boom may help to create a “two-speed economy” … the flow-through benefits will be felt by everyone — to a greater or lesser extent.

Clearly, the growing mining (and mining-related) sector will need to be physically accommodated.

Similarly, the support services and businesses like … accountants, lawyers and the merchant bankers … will all need to engage more staff. And that means we’ll need to construct more office buildings to house them.

Bottom Line: Until we do that (which can take between 3 to 5 years), rentals for both CBD and suburban Office space will continue to escalate those capital cities where the vacancy rates currently sit at around 7%, or below.

Therefore, right now, that means you should be looking to snap up something in Melbourne, Sydney or Perth. And then, ride the current growth cycle through to 2018.

 

Prominence AND Position!

Photo Yesterday, I let some of my clients know about this rather appealing Office Investment property in Blackburn Road, Mount Waverley.

It is located virtually opposite Syndal Railway Station … and has a well-established tenant on board.

You can download a copy of the Brochure now; or perhaps go across to the website, for more details.

And just call me (on 0425 791 254) if you’d like to explore this further.

Will They … or Won’t They?

Balance

Balance

Last month, the RBA left rates on hold — because of what it saw as mixed signals within the Australian economy.

And the rising $A is certainly making its job easier, by generally cooling activity.

Work Allocation

Work Allocation

Growth within the Construction industry appears to have fallen to its lowest level in 18 years. Although turnover for mining and processing plants has once again returned to its path of upward growth.
[Read more…]

Global Progress?

The IMF has recently trimmed its overall global forecast — down to 4.2% from 4.3%, for 2011.

Global GrowthThe emerging and developing economies are tipped to grow by 6.4% (with China’s growth being over 9%).

Whereas, the various advanced economies are expected to grow by a subdued 2.2%, on average.

However, any double-dip recession is considered most unlikely — as investment and domestic consumption has replaced the building up of inventories.

According to the IMF: “Investment in machinery and equipment is already showing strength in a number of advanced economies.”

Nonetheless, spending and investment in most advanced economies will be constrained by households replenishing their savings; and banks remaining reluctant to lend freely to businesses. Plus, the US housing market still languishes.

Overall, the lack of business investment (and therefore employment growth) will adversely impact on tax revenues. And thereby, make government debt reduction programs a slow process.

On all counts, Australia will continue to enjoy solid growth — relative to other advanced economies. And this will provide ongoing pressure for interest rates to rise, over the next three years.

All the more reason to lock in your interest rates long-term … for any Commercial property investments you intend to make.

When Should You
Fix Your Interest Rate?

On Wednesday, I put up this post about whether or not to fix your interest rate, when purchasing a Commercial property. Only to find there was a problem with streaming of the Video.

Hopefully, that’s now been resolved; and so let’s try Take 2.

The simple answer to the question of timing is … when most Investors are not giving it much thought.

Like right now!

Anyway, here’s a short Video to explain my logic for saying this. Hopefully, it will give you a “helicopter view” of where things will head, over the next 5 years. [Read more…]

“Doing Nothing Will Cost You!”

Whenever Investors are confused … the Property Market tends to do nothing and simply moves sideways.

Confusion Reigns

Confusion Reigns


You observed that when the GFC first struck.

People simply put their buying decisions ‘on hold’. And then, frantically played catch-up over the last 12 months … as soon as they realised things were still okay here in Australia.

Over that period, you have seen most Commercial markets around the country showing good growth — particularly in Melbourne.
[Read more…]

Commercial Property Cycles …

h2. How do you ever understand them?

Before talking to you about Commercial property, let’s take a quick look at Investment Cycles in general.

Investment CycleA recent AFR article contained this rather clever chart … showing an Investor’s mood at different points throughout the Cycle.

My reading would be that Australia is currently at the “Optimism” stage of the upturn — perhaps with some capital cities, a little more so than others. But generally, that’s about where most of us are at the moment.
[Read more…]