SPECIAL SERIES: Property tactics that no longer stack up: What investors need to ditch
Property Investment Podcast NetworkShow Notes
From warehouses to medical centres and service stations, not every commercial asset is as safe as it looks. Victor Kumar says three simple tests can separate a smart buy from a costly mistake. A long lease looks like security, but when the tenant walks out, you may be struggling to find a replacement. In Part 2 of the Post-Budget Guide to Commercial Property Investing, Phil Tarrant sits down with Victor Kumar, founder and director of Right Property Group, to unpack the hidden risks in "safe" commercial assets, and how to compare very different commercial asset classes. Victor says every asset should pass three tests: how easily it can be re-leased if the tenant leaves, whether the building will still do its job in 15 years, and who pays when major repairs hit. He explains why industrial assets such as warehouses tend to score well on the first test, while specialised assets like childcare centres and fast-food sites can take longer to re-let. From there, the pair break down office, industrial and retail, including why the rent on paper isn't always the same as rent in practice and rate re-leasability risk across sectors, from storage to service stations and childcare. Finally, Victor outlines the sectors he believes face structural pressure post-budget, including CBD offices, childcare and NDIS-related buildings, and why he says residential is "all about sentiment" while commercial is "all about mathematics".
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A long lease isn't always a safe one, and a headline yield can hide months of vacancy. Victor Kumar says the investors who win in commercial are the ones who know exactly how to manage risk before they buy. Commercial property carries more risk than residential, but not all of it is unavoidable. In part three of the Smart Property Investment Post-Budget Guide to Commercial Property Investing, Phil Tarrant and Victor Kumar of Right Property Group break down what can quietly destroy a commercial investment, and how to protect yourself. Kumar explains why vacancy can run to months or even years rather than weeks, and why the yield is really the price you're paid for carrying risk. They also look at how to size up a tenant, from digging into the lease and the business behind it to checking whether a guarantee is backed by real cash or just a promise. Then there's the fine print. The pair walk through the lease details that can make or break a deal, from "triple net" claims that don't hold up to who pays for fit-outs and make-good clauses, and why Kumar says using your usual residential solicitor on a commercial lease is like treating a fracture with a massage. They also cover economic risk, structural shifts and property-specific traps, including asbestos roofs, contamination and zoning problems. Kumar shares a live example of how he restructured a lease to de-risk a $6 million purchase, and why every investment needs an exit plan.
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