How to get started in Commercial Real Estate investment?

There are a few different ways to make a commercial property investment.

1. Buying a commercial property yourself

Investors can make commercial property investments directly, however, it can be expensive and requires an investor to do research and understand the market they are investing in. Investors should also forecast the ongoing profitability of the investment and assess the potential for long term capital gains. Once purchased, you will then need to manage your tenants, and the ongoing maintenance of the property.

2. Unlisted Property Funds

An unlisted property fund is a form of property investment that provides investors the opportunity to gain access to higher quality institutional grade commercial property assets with a smaller minimum investment. By investing in an unlisted property fund, investors will receive units in the fund/trust which holds the property asset(s) that are managed by a professional property investment manager such as Centuria.

There are generally two kinds of unlisted property funds:

  • open ended – which generally invests in a portfolio of real estate assets, are open for investment on an ongoing basis, have no fixed term and offer liquidity events (like the Centuria Diversified Property Fund or the Centuria Healthcare Property Fund); and
  • closed ended – which generally invests in a single real estate asset, are open for investment for an initial capital raise, have a fixed term and generally offer no liquidity during the fixed term. You can register your interest for future investment opportunities with Centuria.

3. Listed real estate investment trust (REIT)

Australian Real Estate Investment Trusts (A-REITs) pool the resources of investors together to invest in a portfolio of property assets. They generate most of their income through rent, with the majority of this income returned to investors via distributions. An investor prioritising liquidity tends to be drawn to listed property investments because units in the A-REIT can be purchased and sold on the Australian Securities Exchange (ASX).

 

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