Jul 2018
16

7 Points to consider before rushing into the Commercial Property Market

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7 Points to consider before rushing into the Commercial Property Market Update

Property investment has always been one of the most common methods of investing capital. Many know that property investment can be a lucrative business option and hence many investors consider it an integral part of their diversified portfolio.

If you are considering investing your funds in brick and mortar, purchasing a commercial property is worth every penny you spend. While purchasing a commercial property, there are certain considerations that you must bear in your mind. Unlike any other kind of investment, putting your monetary sources in the world of commercial real estate is a quite tough step to take. In order to make sure that your investment turns out to be profitable, you are required to do your research well before purchasing a commercial property.

You can go through these points carefully, considering them as a comprehensive guide on purchasing a commercial asset:

The location: The location that looks lucrative today may not be the same tomorrow and you need to be very carefully for the sake of the business.You also must evaluate the location in relation to your suppliers and end users. The value of a property is estimated by its location. So, make sure to have the clear picture of the location. Investors should take time to research the locality. Get a decent idea of the locality and see if it suits your purpose or not.

The neighborhood: The neighborhood should have basic utilities available. You really cannot run your business well without proper drainage, water and electricity. It also helps to look at the infrastructure development within the area because such can impact on your business positively and also negatively. Find out what impact the developments around the property will directly have on your business and be open to other possibilities too.

Start-ups Popping Up Everywhere: There are startups popping up everywhere today. Everyone has an idea, everyone wants to work for themselves; everyone wants to be an entrepreneur. And where do the budding entrepreneurs of our nation get their work done from? These affordable commercial spaces & flexible workspaces for sale, that are not too large or too small, are gaining popularity. You can easily see the rising demand for commercial properties over residential properties give rise to the most basic economic principle – more demand creates more money!

Layout: Office layout provides a strong impact on employee productivity. Effective office spaces for startups and enterprises help in achieving the company’s goals. Some startups and small enterprises prefer an open office layout because it encourages creativity, spontaneous interactions and brainstorming.

Lease Structure: Find out whether the lease is within your budget or not. Does the price include utilities and maintenance fees? In the CRE sector, lease rates are calculated depending on several factors, with the location of the office and the square foot occupancy being two of the most important ones. Location affects from the land rate perspective – the more classy the area, the higher the rates. And, square footage space depends on the size of the property. There can also be a lock-in period (generally 3 years) during which the tenant cannot vacate the property. While analysing an investment, the investor has to understand how the lease is structured and the inherent risks involved. In general, the longer the lock-in, the better it is for the investor.

Property Taxes: These costs affect your bottom line. Review the taxes and the current market value assessments and determine if they are high, and whether there’s a reason.

Keep patience and stay focused: A common mistake that most commercial property buyers make while investing in real-estate is getting emotional about the matter. Always remember that it is a rational decision not an emotional one.

A commercial income property can be a good source of passive income. Don’t rush to close a deal for fear of “losing out”on a great price. Instead, allow yourself plenty of time to investigate the property thoroughly, and follow the tips above to make sure you find the commercial property that’s best for you. Always determine the fair market value of the property before you take any final decision.

Updated: 7/16/2018 11:29:36 PM
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