Learn About Business

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When investing in property, especially commercial property, understanding business is extremely important. Now, business is a huge topic, and it’s easy to think, “Where do I start?” But when investing in commercial property, remember, you’re not just investing in the property itself, but you’re investing in the success of the tenant who is a business owner.

So, when you’re thinking that industry and starting on that high level is extremely important. If you’re thinking of industries, let’s use the medical industry as one example. Now, as you know in Australia, the population is aging at faster rates than ever, and that is largely due to the decline in the birth rates that have been occurring since the 1970s starting to move down. 

Now, there have been moments in between certain years where they’ve had some blimp upwards, but overall, it’s been coming down. So naturally, we know more older people as part of our society, it’s important to understand that the medical business will start to really pick up because of more patients needing that care.

Now, if you just went to say, “I wanna buy a commercial property. The property looks good, the numbers looks good,” that’s just not enough. And when you’re investing a commercial property, learning about business is extremely crucial.

Another one can be offices. So, in some parts of Australia, offices and the trends have been actually performing really well on the larger scale deals. But for the smaller tenant, you might start to think, “Well, maybe I can just go to a co-working space and use that instead, rather than just actually renting out a whole office and paying for a significant cost to lease something?”

So, if you understood the business and the tenants issues or the problems and the changing environment, suddenly you can start to understand where commercial property movements might go in that sort of example. So, that’s why understanding business is extremely important and knowing how your tenant is going or may go based on certain shifts and trends and and environments can really help you understand where to look next in commercial property.

So, when you’re thinking of investing in commercial property, the property is one important part, but look at the business trends, the type of tenant. Are they popular or is it a growing industry? What’s the competition like? These are some important things to consider because if you’re buying a business where you’re not buying the business itself, you’re buying the property, but that business owner is amongst many other competitors, maybe you start to think, “Well, how are they likely to perform in this heated environment?”

Another example to just throw out there can actually be bank branches. As you’ve seen, some bank branches are getting from larger to smaller. They’re getting more compact as technology is moving on. And if you think of those areas with large branches, how likely are those banks to re-sign their lease agreement with you?

So, these are things to consider when investing in commercial property. Start learning about business. That’s it from us here at InvestorKit, the experts in wealth creation, helping you take action.