Taking steps into syndication

When you’re looking to break into commercial property, you’re not restricted to simply trying to buy in on your own. Aligning with a property syndicate can be a great way to dip your toes into the field, spreading the cost (and risk) across a number of different investors.

“In a syndicate deal, there’s no individual personally backing the loan – you share it collectively, which enables you to buy into properties that might otherwise be out of reach,” says Scott O’Neill, CEO of Rethink Investing.

Property syndicates have a number of benefits. For existing investors, they can be a way to expand and diversify their existing portfolios beyond individual properties, giving them a means of stepping up to the next level of investment. If you’re new to the commercial space, they can also offer a way of minimising the potential risks of going ‘all in’ on a specific property.

Additionally, they retain the traditional benefits of other commercial properties. From O’Neill’s perspective, one of the major advantages of commercial property in general is that it can provide better cash flow than residential property. He points to a recent investment opportunity that arose for a number of his clients – the South Central Shopping Centre in Bundaberg – as a positive example.

We could tell it was a sound investment for a number of reasons,” says O’Neill. “The demand was there from the community – South Central is the commercial centre of the Wide Bay region, which has a population close to 100,000 people. All the stores were fully leased, which is a good sign.”

The shopping centre has been there for over 80 years. However, it was completely rebuilt in 2005; today it is well designed and modern, with access from nearby main roads. Additionally, O’Neill says, the tenants within the property are a diverse mix. Containing primarily medical/health facilities and fast-food outlets, South Central is also anchored by a very successful supermarket. 

“There’s room for future expansion too,” says O’Neill. “The site is underdeveloped at the moment – there’s surplus land, so in theory there could be new tenancy areas or a new freestanding fast-food drivethrough built in the future.”

As with any investment, though, it’s critical to find the property that’s right for your particular needs. O’Neill notes that there are a number of considerations when looking at a syndicate investment.

“Due diligence is always important, but it’s really crucial with property syndicates,” he says. “You need to carefully assess all the usual factors, like interest rates, expected yield and lease quality.” 

Still, with the right guidance and consultation, O’Neill believes that property syndicates can be valuable additions to an investor’s portfolio.

“If you’re looking to break into the commercial space, there are defi nitely opportunities to be had,” he says. “Just make sure you seek out the right advice beforehand.”

Scott O’Neill is the founder and director of Rethink Investing, a BRW Fast 100 property investing company specialising in finding rare positively geared properties all around Australia (commercial and residential).

Scott is an experienced and active investor who was able to retire from his day job at the age of 28. With a current portfolio of 32 properties worth $20m, he is one of the most successful young property investors in Australia. O’Neill has a passion for all aspects of property, especially helping others find great deals.