Why the ‘unsexy’ side of real estate could be your smartest move

Investors Adam and Vicki Stewart are reaping the rewards since switching from residential real estate to the less-sexy but lucrative world of commercial property.

A self-confessed ‘numbers guy’, Mr Stewart was offered $1m more than he paid for his first commercial property, an industrial building outside Brisbane, just nine months later.

Mr Stewart, 46, had purchased the property off-market for $1.88m. Instead of selling, he had the building re-valued and was able to re-invest the equity into another commercial asset, a cold storage facility outside of Toowoomba.

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The former digital sales executive said he engaged commercial buyer’s agent Scott O’Neill, of Rethink Investing, to explore an alternative to negatively geared residential investments.

“Negative gearing in residential property was no longer a benefit, as it relies on an additional income line to gain tax efficiency,” Mr Stewart said,

“I soon realised residential property was not meeting our goals of gaining time back and having choice and flexibility to work while living experiences and spending time with my young family.”

The Gold Coast resident said many would-be buyers were deterred from delving into commercial real estate due to myths surrounding the high risk of long periods of vacancies.

But he said opportunities for both cashflow and equity growth were ripe for investors committed to making informed choices about the market.

Two years on, the Stewarts’ portfolio had delivered a 100 per cent profit rate – “alongside a substantial passive monthly income which has enabled freedom from previous corporate roles, locked to long office hours and set schedules”.

“True time back with the family to enjoy life on the Gold Coast,” he said.

Mr Stewart now works alongside Mr O’Neill educating other investors.

Mr O’Neill said a shortage of industrial facilities had resulted in rapidly rising rents, delivering impressive gains to property owners.

“It’s like a housing crisis, but for industrial property,” Mr O’Neill said.

“Interest rates have risen so that means there’s less owner-occupiers buying – they have become renters.”

Commercial rent had spiked 60 per cent over two years since Covid, while the construction industry slowdown and strong migration had further skewed demand.