Rather than stuffing your life savings under your mattress, why not look to capitalize on your money with an investment? While cryptocurrency seems to be the flavor of the month, commercial property investment is the more stable option and can see you benefit from some exceptional returns. Before you sign on the dotted line, however, there are a few things you need to know:
Why You’re Doing it
If you’ve thought that maybe commercial real estate could be a suitable investment for you, you need to understand why, and what the likely gains could be. After all, there’s a lot of responsibility in becoming a landlord, but plenty of positives as well.
For example, you can benefit from higher returns on commercial property than residential, and enjoy longer leases, a smaller capital outlay, and your tenants covering costs such as rates. Ensure to have a long, hard think about your reasoning before starting the purchasing process.
There are Ongoing Costs
While your tenants cover rates and other commercial property-related costs, you’re responsible for the maintenance and upkeep. As a result, there will always be ongoing costs that aren’t just associated with your property loan. You also have to factor in utilities such as lighting, heating, cooling, and ventilation, as well as care of the grounds. Even keeping parking in tip-top condition is down to you in most cases. You may find you’re spending money on a frequent basis.
DIY Saves You Money
If you’re a new investor who has just purchased commercial property, you may find yourself struggling to come to terms with the sheer enormity of the costs involved. Even adding a wall socket in a commercial building can cost you over $150, which means you need to think smart when considering what you can do yourself and what you hire a professional for.
For example, while you’d hire a qualified plumber and electrician, you may be able to take care of painting and decorating yourself. Rolling up your sleeves and opting for DIY can save a significant amount of money in the long run.
The Area Matters
When you decide it’s time to invest in commercial property, you’ll come to realize that the property’s location counts for a lot. What’s more, if you plan on buying property in a town or city with which you’re not familiar, it’s crucial you get to know the area first.
Find out if it’s a thriving spot, or whether businesses are leaving left, right, and center. The last thing you want to do is buy a commercial property that you can’t lease out, or have to put some serious work into tenanting.
You Need Market Knowledge
Before you purchase commercial property, you need to do your homework. Without sufficient market knowledge, you may find yourself discovering too late that you overcapitalized or undercharged your tenants. Buying property is about more than seeing a property you like. It involves making sure you can get enough money to cover the bills and make a profit. It’s also about ensuring it’s worth your while in the long run. Depending on the area, some properties cost more to buy than what you can realistically get tenants to pay.
Becoming an investor can be an exciting prospect: after all, you’re opening up the doors of opportunity to make a significant amount of money. However, it can go wrong in an instant if you don’t do your homework and know what’s involved. If you pay attention to these tips, there’s every reason to believe you can make it to the big league.
