Olly Newland’s column April 2012
I have always been surprised by how some people react when I suggest they should investigate commercial property investment because it provides a very a good alternative to residential investment.
It’s “too complicated”, they say. Or “too hard to understand” is another common response, as well as fear of vacancies with a consequent loss of income.
Yes, I agree, residential property is the more “liquid” of the two forms of investment, but successful residential investment is, in my view, the hardest subject to master by a country mile.
We all know the advantages of residential property and they are persuasive, that has to be said, but let me give you some of the disadvantages — just for the sake of the argument.
The main problem with residential is that it’s “political” in every sense of the word. From one day to the next there is a steady drum beat, criticising those who own or invest in residential property.
The media run one story after another on overcrowding, shortage of rentals, rising rents, unfair profits, and lately pressure to introduce a capital gains tax or reduce so-called ‘tax rorts’.
It’s no wonder that there is a growing rental crisis, and increasing homelessness, all aided and abetted by the recent tax disadvantages which have, as expected, had the exact opposite effect from what was intended.
All this was predicted by me for over a year or more. And let me quietly tell you something else in the strictest confidence mind you. Draw close, I don’t want to shout. …
Olly is one of the contributors to Commercial Real Estate Investors Guide — Making money as a commercial property investor in New Zealand — available here.