6 investment strategies to maximize cashflow in commercial property.

As an investor in commercial property, the aim is to ensure your properties generate positive cash flow while maximising returns and generating capital growth.

Achieving this requires an approach that considers factors like location, financing options, and tax strategies. Below we explore six strategies used by Australian property investors to optimise cash flow and secure long-term financial success in the commercial property market.

1. Explore Opportunities Outside Major Cities:

   • Look beyond major urban centres like Sydney and Melbourne to explore investment prospects in regional areas or smaller cities.

   • Properties in these markets are often more affordable and can yield higher rental returns due to strong demand.

   • Additionally, regional areas may experience robust economic growth, driven by infrastructure development and population expansion, leading to potential long-term capital appreciation.

2. Maximise Rentable Space:

   • Increase rental income by expanding the usable space of your commercial property.

   • Consider repurposing unused areas to attract more tenants.

   • Properties with flexible space configurations can command higher rental rates and offer better cash flow potential.

3. Opt for Longer-Term Financing:

   • Choose longer-term financing to stabilize cash flow and minimize monthly expenses.

   • Longer loan durations result in lower monthly payments, providing financial predictability for investors.

   • This strategy is particularly beneficial for investors relying on rental income to cover mortgage repayments and property-related expenses.

4. Utilise Interest-Only Loans:

   • Utilize interest-only loans for an initial period to free up cash flow for other investments or property enhancements.

   • Benefit from lower initial monthly repayments and potential tax deductions on interest payments during the interest-only period.

   • While interest-only loans may incur higher overall interest costs, they offer greater financial flexibility and control for investors.

5. Regularly Adjust Rental Rates:

   • Stay competitive by regularly reviewing and adjusting rental rates based on market conditions.

   • Incremental rent increases help maintain profitability and keep pace with inflation.

   • Enhance property amenities and services to justify higher rental rates and attract quality tenants, further optimising cash flow.

6. Leverage Depreciation Benefits:

   • Maximise cash flow by claiming depreciation deductions

   • Capitalise on capital works deductions for structural elements and any other relevant assets.

   • These deductions reduce taxable income, increase cash flow, and provide a valuable financial advantage for commercial property investors.

By implementing these six investment strategies, commercial property investors can optimise cash flow, and maximise returns to achieve capital growth and long-term financial success.

Commercial property is layered and certainly more to consider than residential property investment.

Schedule a call with us today to have an initial conversation about what’s involved and how to set yourself up for success.