For Astute Investors

Why Commercial Property?

Compare the yields

Commercial properties tend to yield a higher return than residential properties – usually between 5% to 10% net. Whereas, residential properties generally yield around 3% to 4% gross, and you still have to pay the rates, repairs, insurance, etc.

Tenants in commercial properties usually pay all the outgoings such as rates, taxes, and insurance. Commercial property generally provides stronger returns in terms of capital growth and income.

CommShare

Commercial Shared Ownership

The right advice

Understanding the market is the key to success when investing in commercial property. Your local CommShare Agent knows the market and can assist in finding that prime retail, commercial or industrial property in a high-demand position.

When buying a share in a commercial property it’s best if you can mitigate your risk by choosing a property that is already leased to a good tenant on a long lease.


Getting started in Commercial Property Investing

Managing risk is important when building a diverse property investment portfolio. Having a range of investments will help manage the risk. Investing in commercial property shares can complement other asset classes in an investment portfolio.

Direct investment in a commercial property through your CommShare Agent can provide access to regular monthly income and long-term capital growth.

Spreading your investments across different types of commercial property (industrial, retail, storage facilities, etc.) offers the potential for capital growth and diversification benefits.

A tenant in common (TIC) share in a commercial property can be traded on a the Tenant in Common Exchange providing the benefit of liquidity.

Buying a tenant-in-common (TIC) share in commercial property is a great way to start growing your investment property portfolio.

It’s hard to find a better investment product that:

  • Is affordable (invest from as little as $25,000).
  • Is a ‘passive’ investment, professionally managed by your CommShare Agent.
  • Pays you monthly rental income of between 5% to 10% NET.
  • Is an asset you own that can be willed, sold, or mortgaged separately.

Buying a tenant-in-common share is less-risky than purchasing a whole property on your own. A TIC share is an asset you own that can be willed, sold, or mortgaged separately.

How will I know if a commercial property is available for shared ownership?

Look for the TicX Listed sticker on the For Sale sign, or ask your agent if the property is ticX listed. Properties that are ticX listed are available for shared or sole ownership, whichever occurs first.

A property share is created when a property (or part of the property) is sold and is purchased by two or more co-owners as tenants in common in separate equal or unequal shares. 

Using your Superfund to invest in Commercial Property

The investment can be leased

Buying a tenant in common share in a commercial property can be a beneficial and affordable way for self-managed super funds (SMSFs) to acquire real estate.

Superannuation law allows superfund members to co-invest with their super fund. The law allows a SMSF member to own a property with their SMSF as tenants in common.

When jointly investing in property with your SMSF as a co-owner the property must not be used as security for any borrowings the member may require.

However, the member is allowed to use borrowings to acquire their TIC share of the property as long as the security on the loan is on another property that they own.

by the SMFS member.

Once acquired, the property must not be subject to a lease arrangement between the SMSF and the member if the property is not a business premises.

This means, if a commercial property is bought by the member and their SMSF, it can be leased to the member to conduct business from it. But if the member and the SMSF buy a residential property, it cannot be leased to the member for private use, only business use.

The Tax Office has ruled that members must ensure that if they are buying an asset with their SMSF, they do so as tenants in common. This is because the superannuation law requires ownership of assets by an SMSF to be clearly identified. In addition, the law does not allow members to use any of their SMSF assets as security for loans they may need to enter into privately.

To locate an income producing commercial investment property that you can buy a direct ownership share in, contact your nearest CommShare Agent.