Trust us, when we say that you are not alone who is facing the below moderate returns from your investments in residential property. Owing to this unsatisfactory performance, many investors are considering commercial property as their preferred alternative.
By commercial properties, we mean retail spaces, office spaces, recreation centers, etc. the motive behind investing in such properties can be-
a) Diversification of investment portfolio
b) Positive cash flow
A few simple to understand benefits associated with commercial property investments are –
a) Strong returns
b) Low risk
c) Stability of income
d) Hedging against inflation
e) Tax benefits
f) Exposure to various other sectors of economy
g) The ability to add worth
h) Investment control
In this blog we will be discussing a few secrets that will ensure that you gain ownership of a successful commercial property. So, let’s get started-
Achieving success in commercial property investment needs an understanding of the multifarious market factors, unique financing requisites, leasing arrangements, understanding and bearing of potential risks and understanding and caliber for property management options. Comprehending these factors will ensure a reliable journey towards a successful commercial property investment.
For instance – Investing in commercial office spaces. Going a few years back, office spaces were mainly the multi-story building, usually developed by big-shot and specialist developers and only the elite class could afford such office spaces. But now, time has changed and any one who can dream big and work hard towards fulfilling his dreams can buy an office space in a commercially zoned property in a good area, which means an assured capital growth.
Putting your resources in commercial property is a great way to earn good money and for this dream to become reality of your life, all you need to do is follow the guidelines and end up accomplishing the ownership of a really rewarding and successful commercial property-
1) Market research and due diligence – So, you want your commercial property investment to be a successful one? It is possible, all you need to do is – Study and comprehend the MARKET because having an apt and correct market information is the key that will unlock the door for you to acquire a valuable property. Read what you should comprehend about the property market –
a) Research the whole spectrum from the big picture to small details, like – vacancy rates and projections of the economy to just walk around and analyzing the area or giving calls to agents and enquire about rentals in the area.
b) Understand your business requirements including if the area will help your business to grow and similarly if you are investing for leasing out research out the same for your tenant.
c) Research about local and state authority’s infrastructural plans for the area.
2) Invest into prime positions – On no occasion compromise on location, put your time and money resources in prime commercial or retail locations. Why prime places? Because they are popular with both investors and tenants. It is vital to contemplate visibility, parking space and accessibility to public transport.
3) Put your resources in a property, which is leasable – Provided you are putting your hard earned money in a new property, then it is extremely important that you mitigate risks by investing in a project or property that is a magnet for good tenants. Good tenants and low vacancy rates with long lease tenure would be the key factors ensuring good and regular returns, which is undoubtedly the chief motive of your investment.
4) Look for the lease structure of the area – The lease structure includes – lease duration, the method and frequency of rent renewal and who is liable to pay the operating costs. Obviously, as an investor, the best lease structure would be a long one with regular rent renewals and a tenant who pays all the outgoings.
5) Opt for new constructions – Generally, tenants and investors are attracted towards newly built properties, as they require little to nil renovations.
6) Opt for real estate with flexible designs – A property having a flexible design ensure that owners are not left with an unproductive floor layout.
Now that you have read what you need to research, what should a property hold for it to be a successful investment, your next step should be to find such a property.