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Any investment advisor, or any investor for that matter, worthy of survival in this day and age knows the golden rule of investment: diversification. While stock markets hold sway amongst the venturesome, even they put a little (or a lot) aside for investment in commercial property. By nature, buffered against market volatility and inflation, it provides good returns on investment, even in the toughest of economic times.
Here are a few tips on how you can leverage your capital and build a secure commercial property portfolio:
Make some friends – Commission-hungry real estate agents can sometimes lead gullible clients down a path they would not have gone had they known better. Besides having your wits with you at all times, it works well in the long run to have a broker you can trust for advice on both properties that suit your interests and mortgage solutions with favorable terms.
Visualize the potential – While many investors may look at a certain property for what it is, with a little insight, you can see it for its potential. A seemingly dead property can, for a variety of reasons, bloom into its full unrealized potential; it is up to you to see which property may or may not.
The winning formula – Cliché it may be, buying cheap and selling expensive is a road well-travelled, and for a good reason. This ties back to the previous two points: having a broker you can trust and seeing a property for its potential. Also, buying when the market heads south can yield good returns when markets stabilize.
Be wary of tenanted properties - While it may seem like a good idea to buy a property that has existing tenants for the cash flow it promises, doing so without studying the tenancy contract and consulting the lawyers can lead to unwanted surprises. Commit with prudence.
• Commercial properties are less prone to the effects of inflation
• Hire a trusted property broker and mortgage advisor for advice
• Prudence is vital when purchasing tenanted commercial units
Source: Bushra Hameduddin, Special to Properties
The writer is a freelancer