Commercial property is not just about buying a shop for investment but also includes buying a restaurant, hotel or any commercial asset that gives you a good investment return.
Six reasons why you should invest in commercial real estate
Highest investment return
Commercial real estate offers a higher return on investment than residential property, especially in recent years, where real estate prices are rising. For some real estate experts, commercial real estate is the safest type of investment due to the guaranteed return on investment.
Longer rental period
The average rent for commercial properties is between 3 and 10 years, while tenant rent may be only 6 - 12 months without warranty renewal. Commercial tenants tend to stay in the workplace longer, especially if they invest some capital in getting the property from the start.
For the lessee is the most important thing, so renewing the tenancy contract is a priority to maintain the value of its commercial asset, ensuring the investor a return of investment always, while the tenant in commercial real estate can change the place of residence under any circumstances.
Low monthly expenses
For commercial properties, tenants usually cover the general expenses of a property such as revenue, water, insurance or corporate fees, and therefore there are lower costs compared to the management of residential properties that are usually owned by the landlord.
For well-selected commercial properties, tenants are likely to make improvements to the structure and layout of the area, which can increase the value of the property. The rent is revised annually and the rent is increased by a certain percentage, which makes your investment a success.
One of the potential opportunities to invest in commercial real estate is the high value of the property during the period that the investor holds the property.
Tips for those who want to invest in commercial real estate
It is important to know that you should not move capital for the long term to be a successful investment, and you should get used to managing your investment without moving the capital, although there will be some periodic expenses for your investment and if you are thinking of selling in the short term, Achieve the investment return you aspire to.
Commercial properties are exposed to periods of risk for a period of time where demand is absent and the property remains without returns for months or even years, meaning you may have to cover expenses during the interim period so you can find another tenant. The more you study the area and the location of the property, the deeper you are from the beginning whenever you avoid this danger.
The risks to property owners such as economic downturn, high interest rates, high unemployment or poor business confidence may mean less demand for commercial property, which may mean finding high-quality tenants. Here, investment returns can be reduced.
Important steps to get the best offer
It is very good to deal with an intermediary in the field of real estate in the area you want to invest in, and like any field, success starts with good planning and these steps are the most important steps you must follow in order to get a successful business deal as follows:
Know what your broker knows
For example, you should know that the valuation of commercial properties is quite different from the valuation of residential properties and that the income in commercial real estate is related to usable space, unlike residential properties, Commercial property leases are longer. You must make an effort to know the secrets of the market because this is the factor that will reduce your risk.
Develop a business plan
Setting metrics is an initial step in real estate deals. For example, you should know how much money you can provide for the initial payment and then start calculating the monthly payments in the case of a mortgage loan or installment payment, and using online tools such as mortgage calculators Mortgage Calculator may give you a clear picture of the total cost of your deal.
Learn how to get to know the good deal
Senior real estate investors recognize the good deal when you meet them. The secret is that they have a third eye, which calculates the damage of the property, the cost of its maintenance and the return of it. In addition, it examines the area where the property is located.
Getting a good deal in commercial real estate does not just depend on evaluating the property, studying the area or getting a good price and many other things, since it also depends on the human factor, on communication. Therefore, you should build a good relationship with the owners of commercial real estate and this gives them the desire to negotiate with you and agree on the offer for you.
Look for motivated sellers
Like any sector, customers are the movers of the real estate sector, your job is to find and find a seller with certain motives to sell his property as quickly as possible and get the lowest prices in the market. In fact, nothing is important in the real estate investment sector before finding a seller who is motivated to sell Real estate and if the seller does not have these motives you can not negotiate with him.