There are three main categories of commercial property;
retail, office and industrial. Each of these holds
many benefits such as a longer lease structure than
residential properties which should provide you with
plenty of security for continuing income. Here are
some considerations to make before investing in commercial
Buying a property outright is the most direct method
of investment but also way out of most people’s
price range as commercial properties reach into the
millions. Instead investing in a fund which holds
physical commercial property in its portfolio is usually
the best way. Alternatively there are indirect funds
which are exposed to property companies, developers
and housebuilders. These funds hopefully make a profit
from rental income and capital growth of the property.
When investing in a commercial property it is important
to think about how its value may improve. A good lease
can allow for great rent escalation over its period
so it is important this is considered before making
a purchase. Other factors can affect the rental value
as well, such as the building’s location, amenities
and more that can lead
to increased growth.
Always undertake a building survey before buying or
investing in a commercial property as serious issues
can prove costly and in some cases stop a deal from
happening. If you own or are an investor in a building
when it is empty be sure to keep its appearance well
maintained to attract potential renters too. This
will also increase the chances of tenant (and therefore
income) retention during the time you have renters.
terms agreed between you, as a commercial property
investor, and the tenants who will be using it are
an important area. Ensure that all parties agree with
the terms and that the agreement is studied carefully.
Everything should be factored into the finances, such
as who has to look after repairs, when rent reviews
will come around and any other aspects. Making such
considerations should put you in good stead for investing
in commercial property either alone or with others.