if you're considering purchasing a small commercial investment property then
there's a couple of things that you need to consider carefully in my view two
things you need to really focus on are one the tenant in the property in other
words how strong or otherwise is that tenant because this is going to provide
you with your flow of income from your property investment the second part or
the second significant thing you need to look at would be the structure of the
properties of the structure the integrity of the structure the condition
of the property under location so let's take a look at the two scenarios and the
two things that I am suggesting to you you need to be very focused on when
you're looking at a commercial investment property one is the tenant do
you buy a property for a million and you have a very good commercial tenant in us
the residential or its commercial investment property you're buying
there's a sitting tenant on a full repairing and ensuring lease at 35 your
lease and you have somebody like McDonald's or Burger King or Super Max
or Super Value or Apple green or some really strong covenant like that in the
building then your income stream is going to be fairly well protected and
you definitely are not dealing with a man and straw if things go wrong or
society dispute about the rent or any dispute about any of the terms and
conditions of the lease as things progress and therefore you're going to
accept yield lesser yield than you might normally expect or might normally be
prepared to accept for example if you're buying a building and you're paying a
million for us and it's McDonald's dinners under paying 40 grand a year in
rent you yield is gonna be forty or four percent rather so you may yield a four
percent that's quite a low yield but you've a very good tenant
the other hand if you had a yield of six or seven percent in other words your
rent was six sixty or seventy grand a year through paying a million first the
likelihood is you're not gonna have a blue chip tenant like a McDonald's or a
Burger King or somebody of that nature you're gonna have a small business owner
you're gonna have a small man or woman coming on a business perhaps a barber
perhaps a hairdresser perhaps a nail bar or something of that nature they're not
going to be a major brand they're not going to be a major franchise and
therefore you have to weigh up the yield you're gonna get with the risk involved
so you may be happy enough to get a yield of six or seven percent you may be
happy enough to get a renter sixty or seventy grand per annum but you do have
to factor in the additional risk involved with a one man or one woman
operation so if things go wrong for example with non-payment of rent then
you're looking at a messy enough situation in trying to recover the rent
trying to get vacant possession of the property if that's what you want to do
and so on you don't have to take certain legal steps it can be slow and obviously
rent it's gonna be accumulating it was not being paid you also have the cost of
going to court you may well end up then with a judgment against your former
tenant for rent outstanding rent and leave your cars but
quite frankly enforcing this judgment may be impossible because the tenant
simply doesn't have the money so that is the first major factor you need to look
us in considering a commercial investment property the tenant the
strength of the Covenant the strength of the income stream how certain is it
gonna be that it will continue coming how certain is it going to be that you
oughta find difficulties and that will come down to an assessment of the
financial and otherwise other strength of the tenant the second major thing you
need to consider will be the building itself a structural
the structure of the soundness of us and whether it's in good or bad condition
whether it's gonna need a lot of ongoing maintenance or perhaps it's relatively
new building that doesn't require or will not require any foreseeable
maintenance in the future for quite a period of time or a business or a
property rather that's in poor structural condition that will
inevitably lead to or need quite a lot of maintenance and perhaps remedial work
and roof repairs and all that sort of thing if that's the case you obviously
you need to get a structural survey carried out but another thing and that's
to assess the condition of the building the other thing you need to consider is
the location you may have a very good what appears to be a very good
investment property and a good tenant carrying on a very good business but if
it's one man or one woman operation and if it's very particular or specific or
personal to that particular individual and they leave or they go bad or fail to
pay the rent or things break down between you and your most a victim you
must consider them the location of the property and that property location may
have been well suited to the business the endeavor that was carried on
previously by the previous tenant but may not be well located for other
alternative uses so you need to consider the location of the property so they are
the three things I think you should look at closely when you're looking at a
commercial investment property and you're considering such an investment a
the tenant and the soundness of the tenant and the likelihood of you
continuing to get your rental income stream into the future be the condition
the physical condition of the property itself and see the physical location of
the property itself remember you can do a lot with a property you can do a lot
with tenants but you cannot move the location of the property so the physical
location you may have for example a chap or a girl carrying on a good business
down on a side street and a bad location and because of there
personal polling power their personal brand their personal clients base build
up through the years perhaps even at home if they walk if they leave or if
they don't renew the lease you may be ending up with a property that is
difficult to let because it's actually in quite a poor location and obscure
location and it's only suited to a very narrow range of businesses I hope you
find this video useful about making an investment in a correction investment
property and if you do I would appreciate it to give the thumbs up down
below and you may be interested in subscribing to my youtube channel if
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