Several Short-Term Strategies For Commercial Property

Clever improvements can bring Quick ProfitsCOMMERCIAL properties are mainly a longer-term investment, bought for their regular high yields — as well as for good capital growth over time.

Even so, an investor with some knowledge and experience can easily find properties able to be improved, and then on-sold for a quick capital gain.

Typically, this would involve improving the income flow from the property; and also the security of that income — thus boosting the property’s overall appeal and value.

So, What are your Options?

There are various ways you can do this. But the simplest strategy would be to buy a run-down property and renovate it.

Alternatively, you might also be able to find a property with a lease that does not reflect current rental. Renegotiating that lease would lead to a higher rent, boosting the value of the property. Longer leases and better-quality tenants will always make a property worth more.

You may also come across properties that have been poorly managed. For example: A block of shops might have several vacancies, or tenants who attract little business. Making the tenancy mix more appealing tends to attract better tenants, and brings in higher rents.

Simply spotting opportunities in improving neighbourhoods — such as inner-city suburbs enjoying a growing number of upmarket residents — is another good short-term strategy.

With experience … you might look to buy vacant buildings, “trick them up” and then, lease them out. Using a little imagination, you can easily discover ways to completely change the use of a property — turning a warehouse into a restaurant, for example, would boost its value.

Bottom Line: Timing the market is another viable short-term strategy. As with the share market, Commercial property can go through periods when values may not change much, followed by periods of sharp appreciation.

And so next week, we’ll explore more about timing and Commercial property cycles.

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