6 tips on getting started in commercial investing

Scott O'Neill

6 tips on getting started in commercial investing

By Scott O'Neill | 30 May 2018

Diversifying your investment assets is important in maintaining financial security in case one asset class plummets. If you want to consider dipping your residential property investment toes into commercial investing, here are six tips to get you on your way.

Look for long leases — A three, five or 10-year leases, with an option to renew

Long lease equals more security! Longer leases are also important when getting a valuation of the commercial property. If leases are expiring in a few months, the value can often recognise zero per cent of the revenue value. So the longer the lease is, the more investors will see value in the property.

Make sure the location is viable

For example, if you’re buying a café, it needs to be in an area that gets consistent foot traffic without an oversupply of competitors. Competitor analysis is a very important part of the due diligence for commercial properties. If you were buying, let’s say a gym, you want to make sure there are not too many competitors currently there, and also understand the potential for future competitors to enter the market.

Understand the commercial property market drivers

Make sure the tenant is in a high demand industry; this is essential for growth. For example, you wouldn't want to buy a Blockbuster store when there was evidence that the industry was being replaced by Netflix. Industries such as the medical and fast food industries are on the rise. Buying into a growth industry can lower the chance of a vacancy.

Understand local demographics

As certain segments of the population move to different locations, new opportunities arise. For example, if there is an increasing median age of the people for a suburb, there is more demand for medical-based businesses.



I personally like to buy multiple cheaper commercial properties as opposed to buying one high-value property. For example, three properties totalling $1,000,000 gives you a lot more lease security compared to only relying on one tenant for one $1,000,000 property. There is also the argument that smaller commercial properties with lower rent expectations are easier to fill compared to large expensive commercial properties.

Understand how long it would take to find a new tenant if your current one leaves

The best way I have found to work this out is by checking “first listing” to “first listed” dates on online real estate portals. An example: if you were looking at a 250m2 warehouse, you would need check how long it has taken to fill a warehouse between 200–300m2. If the average is below three months, the risk is not great.

Having a great understanding of each of these tips is essential to do well in commercial property. When you get it right, the returns can far exceed the best residential returns.



A lease refers to a contract between a landlord and tenant for the use of a property in exchange for a certain amount, under certain conditions for a set period of time.


Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.


A tenant, also known as a renter or occupant, is a person or entity that leases space for residential or commercial use.

About the author

Scott O'Neill

Scott O'Neill

Scott O’Neill is a professional property investor with a current portfolio of 32 properties worth over $20 million, and the Director of Rethink Investing. Rethink Investing is a BRW Fast 100 company (2017 & 2018) and Australia’s number one buyer’s agency for commercial property investors. They also help clients find high returning residential properties with the same expert due-diligence process. Rethink Investing has helped their clients purchase over half a billion dollars of real-estate to... Read more

6 tips on getting started in commercial investing
Scott O'Neill
spi logo

Get the latest news & updates

Join a community of over 100,000 property investors.

Check this box to receive podcast updates

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.