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Proper Finance Solutions - January 2008 Newsletter |
In this issue:
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Capital growth or rental return or both?
There is an opinion that any property investor is faced with the choice between good capital growth or good rental return. Our clients experiencesshow thatit is quite difficult to find a residential property that features both.
Do you know why? Why a property with good rental is likely to have slower capital appreciation?
We decided to ask you first before publishing our answer in the next newsletter. Just reply with your version of the answer.
We willpresent a $A100 voucherfor http://www.homesick.com.au/ to the firstthreerespondents who get the answer right.
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Recent Testimonial
Hi Anton,
Sarah and I would like to say how much we appreciated your and Hakly s hard work in achieving our re-mortgage. We both realise just how complicated and difficult our situation was. Every part of your service was extremely professional and made what could of been a daunting task much easier to handle. Thankyou and your staff once again
Yours Sincerely Mark and Sarah, Scotland
November 2007
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What you need to know about financing a commercial property
Investing in commercial property can be a good alternative to there sidential real estate. A commercial property such as an office, shop, warehouse or factory would generally offer a better rental return than a house or a unit. For example,it will likely beable tocover itsown mortgage repayments. There are other important features that differ the commercial property from residential. Some of the key points to consider:
- Commercial property can return 6-9% per annum in gross rent
- Lease terms are generally longer than on residential property, for example 3-10 years with renewal options
- It takes longer to find a new tenant
- Finance would be limited to 75-80% of the property value, unlike residential finance that can go over 100%
- Commercial mortgages have higher interest rates and fees. The loan terms can go up to 25 years with interest only repayments for up to 10 years
- Banks and non-bank lenders impose restrictions on financing specialised properties as they call such as hotels, petrol stations, child care, retirement homes, caravan parks, farms, sports centers, etc.
- The property value is largely determined by the rental return
- A commercial property is more difficult and more expensive to sell or retenant in comparison to a residential house or unit
- The vacancy periods are usually longer
- The tenant would pay some or all outgoings
- Sometimes the property has to be re-configured or fitted out at the owner s expense to suit the tenant s business needs
- Location is everything!
If you are considering investing in commercial property and would like to know more about financing option, contact us.
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Our selection of articles by Fairfax
US economy slows sharply
Growth in the U.S. economy slowed abruptly in the fourth quarter as consumers curbed spending and homebuilding plunged, according to a government report on Wednesday that kept fears of recession alive...more
House prices to keep going through the roof
ONE man's housing affordability crisis is another man's lucrative investment market. Escalating house prices show little sign of abating and long-term figures confirm Australian residential property is a strong, stable investment - sexy qualities in these shaky times...more
Trade surplus pressures Beijing to raise yuan
CHINA'S trade surplus surged to a record for 2007, adding pressure on the Government to let the yuan rise faster to prevent the economy from overheating, and to cool inflation...more
Melbourne house prices surge 25%
HOUSE prices in Melbourne surged by a record 25% last year, adding to the miserable outlook for first home buyers and fuelling renewed political debate over housing affordability...more
China likely to shield Australia from slump
THE Chinese economy has posted its fastest growth rate in more than 10 years, underscoring how Australia's commodities-driven economy could steer clear of a US recession and turmoil in global financial markets...more
In our next newsletter
- Summary of the finance related frequently asked questions we received over the last 12 months. With the answers of course!
We will be happy to discuss and research various options for your new or existing mortgage in Australia. There are plenty of deals in store for you, simply contact us by sending an enquiry.
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Proper Finance Solutions - January 2008 Newsletter
Proper Finance Solutions - January 2008 Newsletter - What you need to know about financing a commercial property
