The start of a new calendar year presents an ideal opportunity for commercial property investors to take stock of their investment strategy and make necessary adjustments. A thorough evaluation can help you identify areas for improvement, optimise your portfolio and set the stage for a successful year ahead.

At RWC Sydney City Fringe, we specialise in investment strategies including developing exit plans.

Here are some key areas we focus on when working with clients to assess their investment portfolio and performance:

Review your investment goals

Our first step is to work with you to revisit your long-term investment objectives and ensure they remain aligned with your overall financial goals. When we undertake this activity, we take into account any changes in your risk tolerance or time horizon that may require adjustments to your strategy. We then assess whether your current portfolio adequately diversifies your investments and mitigates risk.

Assess your property portfolio performance

Using various programs/software, we calculate key performance metrics such as return on investment (ROI), capital appreciation and cash flow. We compare your performance against relevant benchmarks and industry averages, identify underperforming assets and consider potential strategies for improving their performance or exiting the asset. We talk more about developing an exit strategy later in this article.

Evaluate your property management strategy

We review the performance of your property management team or service provider and assess their effectiveness in tenant retention, rent collection, maintenance and financial reporting. When we are your team we look for opportunities to streamline operations or improve efficiency.

Analyse market trends

We help you stay informed about market trends, economic indicators and industry forecasts. Identifying emerging opportunities and potential threats to your investment properties is important. We can keep you updated with changes in tenant demand, rental rates and property values in your target markets.

Reassess your risk management strategies

The start of the calendar year is an ideal time to review your risk management policies and procedures to ensure they are up to date and effective. We can advise you on additional risk mitigation measures, such as insurance coverage or diversification, and develop a contingency plan to address issues like natural disasters or economic downturns.

Update your financial projections

We’ll work with you to revise your financial projections for the upcoming year, taking into account market trends and economic forecasts.

You should work with your accountant or financial adviser to define specific, measurable, achievable, relevant, and time-bound (SMART) goals for the year. We and your financial adviser can also develop detailed action plans to achieve these goals, including timelines and responsible parties.

Work on your exit strategy

An exit strategy is a crucial component of any commercial property investment plan. It outlines how and when you will sell or otherwise dispose of your property to maximise your return on investment (ROI).

We know many of our clients have inherited their commercial property and need to sell for family reasons or to realise the investment. However, it isn’t good practice to simply place your property on the market. You need to carefully consider your financial goals and any tax implications.

While it may seem premature to think about exiting before you’ve even acquired the property, having a well-defined exit strategy from the beginning can help you make informed decisions throughout the investment process.

Having an exit strategy means you’ll control if and when you sell rather than panicking and enduring a forced sale.

A successful exit strategy takes into account many factors that include:

Investment goals: We work with you to determine whether you are looking for a quick return or a long-term investment or if you want cash flow or capital growth.
Types of exit strategies: These could include outright sale; selling so you can reinvest in a more profitable commercial property; refinancing; and holding for long-term capital growth.
Exit timing: We will advise you on market trends and economic indicators to identify optimal selling opportunities. We assess your property’s performance, including occupancy rates, rental income and operating expenses.
Maximising return: We understand what buyers and tenants want in commercial property and can advise you on property improvements that will increase value and marketability.
Effective marketing: You can’t sell a secret so we work with you to get the word out and use our extensive database of potential buyers.
Due diligence: We will conduct thorough due diligence on potential buyers to minimise risks and negotiate favourable terms.

Important note
While we are experienced real estate agents, we are not accountants or tax professionals. You should get advice from your financial adviser or accountant before making any decisions.

Case study

1A West Street, Petersham

My client inherited the property from his late mother who had owned it for 30+ years.
It was filled with items that had been collected over a lifetime and overall the property was presented poorly. Before our involvement, a neighbour submitted an offer well under the market price. My advice was to declutter but leave the property in its original state. An on-market Auction campaign resulted in almost $300,000 above what the neighbour offered.

The bottom line

By following these steps, you can effectively evaluate your commercial property investment strategy and position yourself for long-term success. Remember, a proactive approach to investment management is essential in today’s dynamic real estate market.

Let us help you with your commercial property

As dedicated local commercial real estate agents, we can help you extract more value from your commercial property. Please get in touch to discuss your circumstances and assets so that we can give you personalised advice. Whether it’s commercial leasing, management or sales, we’re here to help you with your Sydney-based commercial property.

Contact us at Ray White Commercial Sydney City Fringe