INGRID Filmer joined commercial agency Burgess Rawson as head of asset management in 2005.
She later bought a stake in the company and became a director, was named chief financial officer, then, at the start of this year, chief executive.
On her watch, Burgess Rawson has grown its earnings more than 300 per cent.
Here, Victoria’s only female chief executive of a mid-tier agency shares some of her insights into how anyone can profit from a commercial property investment.
Who needs to consider commercial property investments and why?
Many think that commercial property is out of reach, however there are investments available from $800,000 and they often provide better returns and less headaches than residential. Commercial leases are regularly for a longer term and in many cases the tenant pays your costs such as council rates and insurance. Most leases also provide large bond amounts or personal guarantees that cannot be achieved in residential investments.
Don’t you need to be wealthy to invest in commercial property?
As banks tighten investment lending for residential properties, the funds required to invest in commercial are not substantially more. Yes, a larger deposit is usually required, but that can be positive. An example of an entry level commercial asset is DentalOne Clinic in Craigieburn. This property is an outstanding opportunity as it was built recently in 2015, the tenant pays all running expenses and returns $62,165 per annum. Investing in commercial property is a good strategy to minimise risk and ensure your asset is cashflow positive.
Is it worthwhile investing outside metropolitan areas?
Across Australia there are very successful regional areas, with strong investment, ongoing employment and great education opportunities. Regional areas enable buyers to access more affordable properties leased to blue-chip tenants at better returns. For example, in Horsham at the moment an investor can purchase a property leased to Cotton On, which will return $104,500, and the new landlord will benefit from 4 per cent increases to the lease every year. A property such as this in Melbourne would command far higher rent, but it would also be far more expensive to buy and sell for a lower rate of return on your investment.
Stamp duty costs are very high in Victoria, so should investors look interstate?
Many buyers look to leverage cross-border legislative differences. Burgess Rawson is selling a childcare centre in Murray Bridge, which is expected to fetch $1.5 million. That figure would attract stamp duty in Victoria of $82,500, however, as it is in South Australia, stamp duty costs just $25,443. The property offers a 15-year lease with 3 per cent increases annually.
What type of tenants are more likely to produce better returns on an investment?
Choosing the right commercial property is key. Be sure to understand who the tenant is on the lease documentation, and what guarantees are provided. Understanding what you are buying will help determine the price.
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Originally published by The Herald Sun