If you have been considering purchasing commercial property, there are many things to research. Compared to residential investment, commercial property can be a far better asset for returns, if you choose the right property.
Offices, warehouses and retail properties are a great way to expand your investment portfolio, while bringing in a positive flow of cash. Most high-end investors have one thing in common. Their portfolios comprise of mostly commercial properties.
The benefits of commercial property investment are plentiful, and include strong returns, low risk, income stability, tax benefits, investment control, leverage and you can hedge against inflation. Commercial property combines capital gain and income returns, which are also typically higher and more secure, making it a far more stable investment.
Many investors like to buy and improve residential properties for added value to investments. Flipping houses is very common. Buy a run-down house, renovate, and sell as soon as it is done, for a tidy profit. Flipping commercial property is a little more difficult, but it can be done. Buying run-down commercial property and changing its purpose for use could be a very easy way to make money in areas that might be ready to surge in a particular industry.
There are many ways you can add value to a commercial property, including renovations or upgrades, subdivision, or enlargement, redevelopment permissions, and modernising the overall use abilities of the property.
Understanding the market is crucial to commercial property investment success, so get to know the market well. This means doing your background on the businesses your building will attract – research the industry strength.
Invest wisely into prime positions. This comes with research and should lead you to the right suburbs and locations that will be a good investment. High demand positions can yield higher income and attract more attention.
When commencing commercial property investment buy property that already has tenants with a long lease. New buildings or recently renovated buildings will be more attractive to tenants and will cost you less overall. They will also reap higher benefits for depreciation.
One of the best things you can do is invest in properties with potential for further development. Undercapitalised properties that are under-developed or where tenants are paying less than market rent means you can improve and get better income.