No doubt, investing in a commercial property syndicate can allow you to pick and select the properties you desire to invest in. If you’re a new syndicate property investor, then it gives you a chance to buy larger and better quality properties.
Even better, you can spread the risk over multiple property types in different locations. But syndicate property is ideal for people who prefer to have relatively low risk and want to have medium to long-term returns. This post explains some of the benefits of property syndicates.
Access to bigger and better investments
When you find a well established commercial property syndicate, you can rest assured that it has great links to the commercial real estate and even the investment world. Quite often, such property syndicates can be the first to discover when premium properties may be coming to the market.
Also, they can have access to properties that are not usually advertised for sale, these are sometimes known as off-market properties. Therefore, a syndicator can help you to invest in the type of properties that are hard to access by yourself.
You can gain some experience
If you’re not experienced, it can be quite hard to invest in property. This is where syndicate property comes in handy as investing via a syndicate can give you access to specialist and sophisticated skills and even contemporary knowledge. This also applies to wholesale investors who can have experience in residential or share property investing, but don’t have the proper knowledge dealing with commercial property investment.
You can find professional syndicate property operators who know what can make a great investment. They also understand how to get around all the problems which can easily overwhelm a new investor. They know the purchase, all the investment, and development processes very well and understand how to get the best performance from your property investment.
Better financial options
Commercial syndicators can have access to cheaper and better financing options than a newbie or first-time investors. If you decide to invest any amount of money in a commercial property, you may decide to go to the bank, though they can offer you a loan on specific terms.
However, when you are transacting in lots of money on property yearly, the bank can offer you favorable terms. It’s quite similar to a wholesale and retail market where wholesalers can usually acquire better pricing options. This is because of the frequency and quantum of their buying.
You can also save effort and time associated with valuations, inspections, budgeting, and meeting the regulatory issues. All these can be done by an experienced and responsible syndicate. Hence, leveraging the scope, size, and scale of the established property syndicate can become a huge benefit to you.
Similarly, you will realize that syndicate managers have great relationships with mortgage brokers, valuers, accountants, developers, builders, lawyers, and many more. There can be a cost-saving here to you as these suppliers may charge the syndicate much lower fees than a one-off or individual investor, just because they give a large volume of work.
Administrative costs can take away a good chunk of the investment’s profitability. So you need to keep some of these costs low to make a good return. This can happen if you have a syndicator who doesn’t charge you for managing these service and trade providers.
It’s a hands-free investment option
Commercial property investment is regarded as a more stable investment than other investment options. Ideally, long leases can mean secure returns and minimal risks. However, just like having a residential investment property, you need to have a certain amount of management and maintenance in any year.
When you invest via a syndicate, you can rest assured that the management team will take care of your investment. Therefore, you may not need to deal with tenants’ complaints about any of the maintenance requirements of the property. Instead, the syndicate management will handle the unlisted property funds the best way possible.
Best of all, they can do the backend administration to make sure that the tenants are happy and they can even negotiate new leases. Responsible syndicates can also hold significant reserve funds needed to handle any unexpected capital expenditures. So ensure that you ask the policy of the chosen syndicate before you decide to invest.
Property portfolio diversification
Investing in a commercial property syndicate means that you can usually invest a smaller amount of funds. This gives you a chance to diversify the risks of your capital or savings. Diversifying your portfolio has the benefit of reducing the inherent risk linked to any one specific type of investment. This is because your capital is spread across multiple properties, states, locations, and tenants.
As mentioned earlier, you can make several investments in commercial and residential syndicates or even do a combination of both direct and syndicated investments. In most cases, property syndicates can be diversified and even include several types of properties in different locations.
When you distribute capital across various areas and asset types, you can take advantage of some growth cycles of several property markets. Aside from this, the individual movements of multiple industries within these markets can benefit you.
This diversification may also help you to create a more balanced portfolio that can include a mixture of both high growth and incoming-producing properties. As a result, you can benefit from a stable cash flow and long-term capital growth.
Diversification can also play a huge role in reducing your exposure to risk and fluctuations in the market. Just as investing in different asset types and locations can allow you to take advantage of the growth in different markets, this strategy can also reduce the chances of being left with a poor property portfolio when these markets experience a downturn.
This can give you a far greater level of protection from changes in the market than having all funds into one property and relying on the property to perform. As you can see, diversifying is suitable for new or seasoned investors as it can give you that much-needed security in case something happens in the market.