Photo courtesy: bretthalvorsonassociates.com.au
Are you in an investing mood, but can’t decide what you want just yet? Here are top three reasons that might just make you decide to go commercial.
- Higher returns – it depends on the circumstances, of course, but commercial property returns can be higher than what you can get out of residential investments. As long as it is in a prime location, the building is in good shape, and the market conditions are right, you can expect excellent returns from your commercial property investment.
- Smaller outgoings – while tenants of commercial properties shoulder most of the expenses including management fees, maintenance, etc., all those combined only amount to around five percent of rent received. In case you were wondering, it is up to 30 percent for residential investment properties.
- Longer leases – commercial leases are usually a lot longer than residential. There is a downside to this, though. It is mostly easier to find tenants looking for houses than for commercial space. If you do decide to invest in a commercial property, you need to constantly have contingency funds to cover your mortgage if and when your property goes vacant for an extended period of time.
- Before signing anything, check the lease first because investing in a commercial property involves a more complicated process.
- If you do not entirely understand the scope of the investment, consult a professional.
- Have a team of consultants ready to answer your questions. You should include an accountant, business real estate broker, financial planner, investment adviser, and a property lawyer too, just to be on the safe side and just so everything is clear before you take the big leap.
Commercial properties include shops, offices, and even factories. They are made up of three asset classes: office, retail, and industrial. It all depends on your budget and your risk tolerance. You have the option to invest in an office space, shops, restaurants, factories, or warehouses. The choice is yours. Good luck!