Deciding whether to invest hard-earned money into commercial or residential property is not a decision that should be taken lightly by prospective investors. Both types of investment opportunities offer different rewards and ultimately, they each present their own set of challenges. However, buying a commercial property can often be a good investment opportunity and can offer a more secure investment with potentially larger financial returns than an investment in residential property.
Here are some tips for successful commercial real estate investing:
Choose a strategic location
A key factor in making a good investment in commercial property is the location of that property. The best tenants are those whose business performs well within your premises as this offers an investor higher security. A prospective investor should consider the type of business it would ideally like its tenant to carry out, and then establish whether the location of the property is suitable for such use.
Make research regarding the commercial property
Make sure you undertake your own investigations into the commercial property market of the area where your potential investment is situated. It is a good idea to look at the market value of similar types of property in the immediate area to ensure that you are paying a fair price. You should also consider any rates and taxes which you may be responsible for, once the purchase has concluded, particularly during any void periods.
Determine whether you and your assets are adequately protected
Unfortunately, as life happens, so do lawsuits. That means you need to do everything you can to protect yourself. Ask yourself the following questions to determine whether you’re protected:
- What do you have at stake if you lose a lawsuit?
- How is your property protected?
- Is your personal property (for example, your home) protected?
- Are your other investments totally separate from each other so that one lawsuit doesn’t affect the other investments?
Talk to a lawyer to ensure that you’re protected if you’re sued.
Realise the risk
When embarking on investment in commercial property, it would be wise to assess all possible risk factors. It is also advisable to have funds set aside to cover the occasional vacancy or for when maintenance, either regular or unexpected, is required so that your liquidity is not jeopardised when problems arise. Diversifying your investments will help you to weather most economic storms.
If you’re considering these tips you’ll need as much knowledge as you can gather and the help of an expert who really knows the market. With the right mindset and the best advice, your investment could be the first of many. Have your commercial property listed for buying and selling on National Brokers Network today.
