Unlike residential property, which has been discussed in length in many forums, commercial properties are a mystery to many people. Many people have also had the chance to rent residential property at a certain point in their lives so they know a bit about them. If you opt for commercial investment properties, you should learn a few things in order to reap full benefits.
While many people only think of investing in residential units, there are numerous options for any one going the commercial way. For instance, you can choose offices, industrial or retail property. This means you are not tied down to one area. Among the three options, you can pick any, which you feel has enough benefits.
The risk threshold in commercial property is much higher than in residential ones because of the likelihood of extended vacancy periods. However, the higher risk also means the rate of return is much higher. For example, if residential property gives you a five percent return, you can expect around eight percent from similar commercial investment. This can lead to quicker recovery of the money one spends.
When investing in any property, you have to give attention to the kind of tenant you are getting. Luckily, for business units, you are likely to get a high quality client especially if it is a large unit such as a warehouse or big office complex. The duration the unit is leased is also likely to be longer than that of a residential unit, which is around six to twelve months.
When you invest in this kind of property, you will be lucky because the tenant will pay most of the outgoing expenses. These might include insurance, council rates, repairs and maintenance. This will lift part of the burden because will be able to keep most of the rent collected unlike the case of a residential property. You only need to make sure these terms are included in the lease agreement you sign.
Even with the benefits, this kind of property also presents some challenges to the investor. For instance, the cost of entry is much higher than in the case of residential units. This is especially the case if you are buying property in a central business district or an industrial area. You can try to change this by buying smaller strata title property.
Commercial properties also incur higher maintenance costs when the need arises. This is because you have to do more than just changing the paint on the walls or the floor covering. The place might require a new air conditioning system or upgrades to meet safety or health concerns. Remember, the tenant might not get an operating license if the renovations are not done so there is no compromise.
With these tips in mind when thinking of investing in commercial properties, it will easy to get good results. This will ensure that one gets good returns from the investment made. One will also avoid some of the problems such as long vacancy periods or very high costs of the property by choosing affordable areas.
While many people only think of investing in residential units, there are numerous options for any one going the commercial way. For instance, you can choose offices, industrial or retail property. This means you are not tied down to one area. Among the three options, you can pick any, which you feel has enough benefits.
The risk threshold in commercial property is much higher than in residential ones because of the likelihood of extended vacancy periods. However, the higher risk also means the rate of return is much higher. For example, if residential property gives you a five percent return, you can expect around eight percent from similar commercial investment. This can lead to quicker recovery of the money one spends.
When investing in any property, you have to give attention to the kind of tenant you are getting. Luckily, for business units, you are likely to get a high quality client especially if it is a large unit such as a warehouse or big office complex. The duration the unit is leased is also likely to be longer than that of a residential unit, which is around six to twelve months.
When you invest in this kind of property, you will be lucky because the tenant will pay most of the outgoing expenses. These might include insurance, council rates, repairs and maintenance. This will lift part of the burden because will be able to keep most of the rent collected unlike the case of a residential property. You only need to make sure these terms are included in the lease agreement you sign.
Even with the benefits, this kind of property also presents some challenges to the investor. For instance, the cost of entry is much higher than in the case of residential units. This is especially the case if you are buying property in a central business district or an industrial area. You can try to change this by buying smaller strata title property.
Commercial properties also incur higher maintenance costs when the need arises. This is because you have to do more than just changing the paint on the walls or the floor covering. The place might require a new air conditioning system or upgrades to meet safety or health concerns. Remember, the tenant might not get an operating license if the renovations are not done so there is no compromise.
With these tips in mind when thinking of investing in commercial properties, it will easy to get good results. This will ensure that one gets good returns from the investment made. One will also avoid some of the problems such as long vacancy periods or very high costs of the property by choosing affordable areas.
