How to secure a steady property rental income

By Nina Cuturic

There’s a new breadth of knowledge to attain when venturing into commercial property.

However, once the fundamentals are un-boxed and you have a qualified professional on-side to guide you throughout the journey, it can offer you some real cash rewards.

In fact, commercial yields at times can far exceed that of residential real estate. While tenant vacancies are generally known to last for a longer period of time, director of Rethink Investing, Scott O’Neill, says that the effects of this can be mitigated by ensuring that you purchase the right type of property and keep pace with the sphere by being immersed in it.

Sitting down with editor Sarah Megginson, O’Neill shares that investors tend to assume that “it is a very highly expensive thing that you need a lot of dollars to get into”, and so it’s not often an avenue that they will approach with confidence.

“The reality is that you can find a property in a capital city for $350k, sometimes even less. We have a good tenant in it, three year plus lease, a good quality suburb. The various entries aren’t too high, and then once people get past that, then they start to seriously consider it,” O’Neill says.

“You need to talk to a lot of experts in the field that have purchased properties before, even just calling up commercial real estate agents just to ask them about what is coming up.”

He adds that investors should connect with others who have invested in commercial before and have had wide exposure to it; including having executed a number of profitable deals.

Most lending for commercial currently falls between the 70% to 75% loan to value ratio (LVR), O’Neill says, but he has started to see 80% LVR enter the market. Interest rates look to generally vary between 3.5% and 4.5%.

O’Neill expects this year to welcome an even more competitive rate for larger loans.

To find out how to take your first steps into commercial investing and which experts to connect with, watch Scott O’Neill’s full interview above.

More Home Loan Guide