This is a 90 Day Roadmap to help FASTRACK you to your first commercial property deal.
What does the next 90 Days look like for you?
If you can generate cashflow and a secondary income how would that affect the quality of your life?
I want to help you plan and have a strategy, so your first commercial property deal will help you set up a commercial portfolio for future growth and more cashflow.
Let’s start by defining CASHFLOW within the context of commercial property investing.
Cashflow is what you keep, after you pay the mortgage.
What does that actually mean?
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You will collect the rent payment from your tenant
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Your tenant will pay the outgoings. This can include your strata fees, insurance, land tax and others.
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You are not responsible for these outgoings with a commercial property the same way you are with a residential property.
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You then pay your mortgage
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You keep what is left after the mortgage payment
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This net after the mortgage is your cashflow
This cashflow becomes your passive income.
So the important question to ask yourself is,
‘How much cashflow do you want?’
How do you refer to this passive income in commercial property investing?
This is known as a Set and Forget Property
There is a set lease, with an annual set increase, with a stable tenant.
If the property you are investing in, has a stable tenant than this is referred to as a ‘Set and Forget Property.’
With this type of an investment the cashflow is very predictable.
Where does Growth play a role in commercial property investing?
In commercial property investing, the priority is on cashflow over growth. The reality is that cashflow will generate growth.
How do you achieve growth with your portfolio?
There are four key factors in Growth; Gentrification, Hub, Logistics and Uplift.
1. Gentrification is a priority target when you are choosing a location for your first commercial property investment.
The rent price will go up
Therefore the value will go up
This will increase the demand
This is usually directly tied to a population increase
2. Hub is a term that is based on tenant mix
Are you bringing together tenants in a specific industry?
Are you able to bring together beauty tenants or medical tenants?
Can you bring multiple beauty or medical tenants into a multi-tenant property?
The right tenant mix in a ‘hub’ will help ensure that rent prices stay high and that your commercial property has a high value
3. Logistics are becoming more important for commercial property investing
Focus on a strategic location
How does your first commercial property investment address these three critical factors?
4. Uplift is directly tied to the future value of portfolio
What is the future potential of your first commercial property investment?
Generate More Cashflow
An example of this would be, can you split a single tenant into a multi tenant property?
Generate More Growth
An example of this would be, can you invest into an area before it is gentrified or their is a population increase?
Develop More Opportunity
An example of this would be, can you subdivide a large lot or can you invest into a mixed zoning property that opens many more opportunities?
Next Up Lesson 2 Switch From Residential To Commercial