Commercial real estate is considered to be promising to invest in. of course, there are differences in handling residential investment and commercial property investment. One of the biggest challenges of investing in commercial property is the complexity. It takes also longer to make profit from commercial property investment. Some sophisticated investors are getting interested to invest in commercial property because they see it as challenge as much as opportunity to build their wealth. Commercial properties include a shop, industrial warehouse, and many more types.
What you need to know about commercial real estate investment
Remember that larger commercial premises have high entry-level price. Even though it is promising to invest in commercial properties, there are still risk and weighs you should consider. Working alone handling commercial property investment is possible. However, it will be more effective when you including a solid team to work with you. The goal you have will be more achievable than when you do it on your own. Here are more about commercial real estate investment you should know:
- You need to know what you are getting into before pouring your money for commercial property investment. Also remember that most commercial leases are retail in nature. Even if the premise is not a typical shop, it is still considered retail because it provides goods and services. The leases of commercial property are covered by their own legislation which protect tenants more. About commercial real estate lease, there are legal costs that should be considered as well as land tax and safety related cost.
- Tenants of commercial lease have more flexibility to make any changes to the property to fit their needs and liking. This is different from residential lease where tenant has limit privilege to do so. Of course the changes proposed by the tenants of retail lease cannot be done suddenly. They still need to approval from the landlord as well as the local council. In addition, tenants are also the one who are responsible to pay for the cost of the changes they proposed. However, tenants also should restore the premises to its original condition and pay it on their own. It is possible to make arrangement and negotiate possible scenario for the premises between tenants and landlords.
- If you are a landlord of commercial property, you are not responsible to pay for additional costs because your tenants are. Your tenant will be responsible to pay for additional costs include water rates, council rates, insurance, repairs, refurbishments, air conditioning maintenance costs, etc. This is one of the reasons why investors choose commercial property to invest in. they don’t need to think much about additional costs since it is the tenant’s responsibility.
- However, the risks are still there. If you’re your tenant’s business fails or goes bankrupt, you are left with vacant commercial premises that can last for months or years. That is why commercial property investment is more suitable for experienced and advanced investors. It is also important to have reliable team and use the right strategy.