Commercial property investment and management is a bit more complex compared to residential property management but a viable venture. If you are a landlord in real estate you can try to diversify into commercial property. In commercial property, you will earn more revenue.
Commercial properties include office spaces, warehouses, and factories. The investment is riskier but the income is attractive. You may be asking where do you start. Here, you will get information on things to consider when buying commercial property.
Basically, for you to be a successful landlord, you need information that will help you in making tactful decisions. The benefits of commercial property investment are the driving force in this business.
Following are some benefits of commercial investment;
- High Revenue
Commercial property guarantees consistent flow of income in terms of rent. Many commercial properties may not significantly appreciate in value over time, but the landlords can still make livelihoods from them.
Commercial property rent is high compared to residential property. That implies to will have a reliable stream of income as long as the property has 100% occupancy.
On average, a residential house has a payback period of 28 years which is quite a long time. therefore, commercial property seems to be a nice investment venture you can consider. If you buy the property in a strategic location, be sure you will live a good life. You can even buy the property on the mortgage.
- There is a lot of reliable information on commercial investment from existing real estate databases
From existing data on real estate, it’s the known brands that make good tenants since they have a strong financial muscle. Also, government agencies always have a long-term tenancy agreement. Having these two categories of tenants implies high guaranteed returns. The tenants will always rent in time without defaulting, and their chances of relocating are minimal. Buying this property initially is capital intensive. You may be required to take a mortgage. Therefore, you need to be sure that the monthly rental collections can cater for the servicing of the mortgage.
There are cheaper commercial property options. Mostly, these properties have empty spaces. Such properties attract less financially stable tenants who are looking for cheap spaces. While the initial cost of investing in these properties is low, the income flow is unpredictable. The units have high tenant turn-over which makes the rent yields unreliable.
The financial institutions are willing to finance viable property investments. If the property you want to purchase has a low likelihood of returns, lenders would shy away from giving you a mortgage facility.
TO BE CONTINUED…