The two most common challenges we’re told readers face in this changing and ever-evolving investment market are, 1 – obtaining finance, and 2 – managing cashflow.
Now, more than ever, Banks are looking at an investor’s ability to service their debts and imposing increased restrictions on lending capacity and serviceability. This level of scrutiny is only expected to increase and is a direct impact of tightened regulation from APRA and findings from the Royal Commission.
Cashflow has always been an integral piece of the investing puzzle and getting a loan approval across the line. This is because a loan’s interest rate repayments may be calculated by the bank at a flat 7.2%, regardless of the actual interest rate on offer. In addition to this, some banks are capping rental income at 80% of actuals, meaning that any previous cash surplus on a prospective purchase is quickly reduced if not eliminated entirely.
This might provide the rational on why higher yielding markets such as Geelong, Hobart, and Ballarat have been some of the best performing markets over the last 12-18 months, however as capital growth is increased, the rental yields and ultimately the cashflow of these markets are reduced.
When seeking an investment in real estate without the need for significant upfront capital, Commercial property investment through a managed fund may be a beacon of light. As a possible solution to generate cashflow, and continue to move forward with the growth of portfolios, there are a number of options available to Investors.
We’ve done the research and believe Queensland is still ÃƒÂ¢Ã¢â€šÂ¬Ã‹Å“the buyers state’ for commercial property. Cost efficient enough to get in at lower entry price points, but also strong enough commerce to ensure the property is tenanted.
Watch this page over the next week, and we’ll take you through the process of investing in commercial property, and how you might be able to get in at a much lower entry point that you might anticipate is required for investing in commercial property.
This article provides general advice only and does not consider your objectives, financial situation or needs. You should consider whether this information is suitable for you and your personal circumstances and we recommend that you seek personal financial product advice on your objectives, financial situation or needs and obtain and read the relevant product disclosure statement before making any investment decision.
15th July 2019
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