Traditionally, commercial property investment has been the area of interest for real estate property professionals and establishments such as insurance companies, pension funds and big agencies. Since the financial world is getting volatile these days, individuals from every background have started to look for investment opportunities in the commercial property market. In addition to this, the disappointing stock market situation, pension fund issues and financial scandals have made people to opt for commercial property investment and yield a relatively high income.
Investment on commercial property has become the second most popular option after residential property investment for people. Those who are successfully investing in residential properties like flats and houses have started to realize the profit potential of commercial properties. The commercial property such as offices, shops and workspaces has become a source for investors to earn high income and substantial returns. In fact, commercial properties are providing a better investment option than the government securities and equities.
What is commercial property?
When a property is given on lease or rent to a business, it is called commercial property. All the properties including industrial sheds, storage facilities, factory premises, office space, theme parks and theaters come under this category. All these real estate properties are exclusively used for making income.
How commercial property investment helps?
Investors feel confused about whether to invest in commercial real estate property or residential property. Investment in commercial property will give them a lot of advantages over residential property investment. They can be summarized as follows:
Secure and Durable Cashflow Commercial real estate property normally involves lease contracts for 10 years or more. Again, these property leaseholders are less likely to make any irregularity in payments and even if they get bankrupt, the financer may give the payment for rent in order to prevent the lease from getting cancelled.
Repair and Maintenance:-Commercial property occupants are responsible for the repair and maintenance of the property in contrast to residential leasing, where the responsibility lies on the landlord.
High income yield Commercial property investment allows investors to generate a high income throughout the lease period. The residential property investors depend on the market value of the house in order to get a good return. This strategy works best when property prices are at peak but fails miserably during a plunge in property value. However, investment in commercial property is found to be performing well during the rise and fall period of property price. It has exceeded the equities and government securities in ensuring growth and stability.
Things to consider before investing in commercial properties
Any person looking for investment opportunities in commercial real estate property should first find out whether he/she can acquire the property without getting any financial aid from a bank or any other financial institution. If he/she can manage to do that without seeking any loan then the individual can go ahead with the property investment plan.
When there is insufficient fund, then the individual should explore different financing options that would help him/her to acquire the commercial real estate property and choose the least expensive one from them.
Those desirous of commercial property investment must verify the land use of the commercial real estate property that he/she plans to purchase. In addition to this, the buyer should also consider whether there is any possibility for a steady increment in rental payments in future. Sometimes, older commercial buildings are declared unsafe or recommended for demolition. The property investor must therefore do the necessary inquiry about the property before acquiring it. It includes confirmation of tax payment till the date and much more.
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