HISTORY has proven time and time again that two types of investment have stood and endured no matter what the economy throws at them;

Gold, and bricks and mortar.

 

These two investment vehicles have a solidarity of performance and stability that the sharemarket and bonds and cash holdings have never had.

They say time is the healer of all things but give gold and commercial property a little time and they have always been the cream that rises to the top even when the whole world is in a financial panic.

If we think about the game of monopoly we all know that those who end up winning are those that hold the commercial assets.

If you decide that commercial property is the investment vehicle of your choice then the next question is what to buy and how to manage it.

Are you buying the building to operate your own business from, or will you need to find a tenant and deal with a lease?

If it’s the latter, then it’s important to know a little about property management and what is involved.

The actual cost of property management is borne by the lessee or tenant and forms part of the outgoings which are the additional costs over and above the rent paid by the lessee.

This includes council rates, insurance, body corporate fees and  water and sewerage.

Commissions vary between agents with a range of 5 to 6 per cent of rent and outgoings reasonably standard, depending on distance to the property being managed.

For your money you can expect your agent to collect the rent and the outgoings, pay the bills and monitor the condition and maintenance of the property.

The agent will also represent the owner at body corporate meetings, offer advice on rent reviews, and if necessary, pursue rent arrears.

We find that clients who own multiple properties in most case prefer to have their properties managed.

Properties under management are often more attractive to interstate and overseas investors, especially if the management history shows quality tenants and sound maintenance practices.

Extra costs are incurred at the time of negotiating a new lease with the lessor charged a letting fee to take into account the extra time taken to prepare the documentation and settle the contract.