Commercial real estate has always been an attractive investment as it offers better returns on investment. But, when investing in commercial realty, you need to do thorough research and planning, and there are a few things to consider as well. In this blog, we will discuss about the things to consider when investing in a commercial real estate.
Commercial real estate usually offers much better yields than residential properties, and it also helps in diversifying your investment portfolio. If you think that investing in commercial property is the same as investing in residential property, you probably are in the wrong frame of mind. There are huge differences between these two types of property investments. Hence, when you consider investing in commercial real estate, you need to do your research to determine whether the purchase is a smart investment.
When investing in commercial real estate, you should do your homework about the working of the commercial real estate market, and plan accordingly.
Here are things that you should consider when you are investing in commercial real estate –
When making an investment in commercial realty, location holds the top position. In a city, there are areas which are commercial hubs, and then there are the ‘not-so-preferred’ areas as well. When it comes to leasing or selling, the location obviously plays an important role in the revenues that you earn. A good location should be easily accessible, should be close to key hubs, etc. and these should be carefully evaluated. If you buy properties at prime locations, banks offer loans easily and you can earn good appreciation in the future.
- Property inspection
After selecting a location, the next step is to go for a property inspection. Visit the property and inspect the infrastructure of the property including that of the surrounding area. Property inspection will provide an idea about the resale value and the rental income of the property in the future. Besides the infrastructure, check other facilities like lift, security, drainage, electricity, etc. before finalizing the property.
- Estimated cost
One of the biggest mistakes committed by investors in commercial realty is not estimating the total cost of the property. In addition to the actual cost of the property, there are additional costs to meet such as maintenance, building insurance, power backup, and other charges. Hence, it is important to take into account all these costs as all will add up to make the final cost.
Investing in commercial realty is fraught with risks and frauds, so remember to verify all the property related documents, such as title deed, approvals, planning permit, taxes, utility bills, etc. before investing.