Why should I invest in commercial property for cashflow?

Commercial properties often offer higher rental yields compared to residential properties, providing investors with the potential for greater cashflow. Additionally, commercial leases typically have longer terms and may include provisions for rent escalations, providing stability and growth in rental income over time.

How can I identify properties with strong cashflow potential?

Look for properties in locations with high demand for commercial space, such as central business districts or areas experiencing economic growth. Assess factors such as rental rates, vacancy rates, tenant quality, and lease terms to determine the cashflow potential of a property.

How can I leverage financing strategies to improve cashflow?

Explore financing options such as refinancing, debt restructuring, and interest rate optimization to lower financing costs and improve cashflow. Work with lenders and financial advisors to structure loans with favourable terms and amortisation schedules that align with cashflow objectives.

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Work with a commercial property

buyer’s agency to avoid negative gearing

Discover how working with real estate professionals can help you avoid the financial pitfalls of commercial property investing.

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Why avoiding negative gearing is important

As a commercial property investor, no one would like to earn less than what they are putting into their investment property. Unfortunately, this scenario is not uncommon among many investors who fall into the financial traps of the commercial real estate market.

Negative gearing occurs when the investor is paying more to finance and maintain the property they are investing in than the income they gain from their property rental. As negative gearing means that investors are unable to offset the amount of money they are putting into their property, it can be financially detrimental to the investor. Between 2021-2022, it had been revealed that 1.1 million investors had negatively geared properties.

To avoid this financial pitfall, commercial property investors, whether new or experienced, should turn to a commercial property buyer’s agency for advice and assistance in their commercial property endeavours. With their help, investors can depend on and learn from experts in the real estate sector on how to navigate the constantly changing real estate market and boost their investment acumen to create a financially stable investment.

Let’s explore the different ways a property buyer’s agency can help investors avoid negative gearing in their property investment pursuit

How a property buyer’s agency helps investors avoid negative gearing

1. They help with your property selection

Buyer’s agents assess various properties based on factors such as location, property type, size, condition, and potential for capital appreciation. They evaluate rental yields relative to purchase price and ongoing expenses to ensure properties are cashflow positive or have the potential to become so. They also consider factors that can influence rental demand and property values.

2. They help negotiate complex contracts

Buyer’s agents leverage market knowledge and negotiation skills to secure favourable purchase prices and terms on behalf of investors. They also conduct thorough due diligence to identify any property issues that can be used as negotiation points to lower the purchase price or request concessions. They negotiate with multiple parties to optimise the financial outcomes for investors.

3. They help with property improvement

Buyer’s agents conduct property inspections and assessments to identify opportunities for value-adding improvements, such as renovations, upgrades, or conversions. They also provide advice on cost-effective improvements that can increase rental yields, attract higher-quality tenants, and enhance the property’s resale value. They also ensure compliance with relevant regulations.

4. They help with portfolio diversification

Buyer’s agents advise on diversifying property portfolios across different geographical locations, property types, and market segments. They balance the portfolio of investors with a mix of high-yield, low-risk properties and properties with the potential for higher capital growth to optimise overall returns and mitigate risks. They help minimise exposure to market fluctuations.

Why work with Unikorn?

At Unikorn, we are dedicated to assisting new and experienced commercial property investors in building a profitable, cashflow-positive commercial property portfolio. Our experts will guide you through every step of your investment journey, eliminating confusion and aiding in wealth growth.

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FAQs

What is negative gearing, and why should I avoid it?

Negative gearing occurs when the expenses associated with owning an investment property exceed the rental income it generates. It can lead to financial strain and reduced profitability for investors. Avoiding negative gearing helps maintain positive cash flow and ensures that your investment generates income rather than draining resources.

How can a property buyer's agency help me avoid negative gearing?

A commercial property buyer's agency specialises in identifying properties with strong rental yields and potential for positive cash flow. They conduct thorough market analysis, assist in property selection, negotiate favourable purchase prices, and provide tax planning advice to optimise your investment returns and minimise the risk of negative gearing.