10 Thumb Rules for Successful Commercial Real Estate Investing - Bhutani Group

If you intend to invest in commercial real estate then you should follow some principles to earn higher returns.

All you need to do is follow the given set of points at the time of making long-term investments in commercial projects in Noida to earn much higher returns from these instruments.

Check the Current Demand with the Upcoming Supply

A savvy investor should analyze and gauze the micro-market of the commercial property before burning a hole in the pocket.

Ensure to evaluate of the stock thoroughly by regularly checking the published reports related to the number of offices already completed and leased along with the details of the upcoming supply as per the existing demand in each city.

Location

Location plays a vital role in this aspect. Both these types of income are heavily dependent on the location. One should always zero down on properties where the vacancy level is below 5%.

The real estate companies are the ones that epitomize the definition of perfection in commercial real estate investing.

How Risky is the Property

One should check at what price are the new buildings being rented today in the given area.

This concept helps you to judge whether you are ending up buying an asset that is over-rented at a market price that seems to be above the current trend.

The Type of Residents

The quality of the tenant plays a major role in increasing the value of any commercial property.

Not only this, but the property's value also tends to increase if there is a high-quality occupant. Try to keep yourself away from small and unknown companies to regret in the future. It is always advisable to seek opportunities from the world of blue-collar multinational tenants for better results.

Periodicity of the Security Deposit

One should be very cautious when it comes to finalizing the security deposit, especially in the case of commercial properties.

This could be mainly because they are either looking for a short-term option or have cash flow issues. The ideal security deposit is the one that usually varies between 10 and 12 months’ rent.

Terms and Conditions of the Lease

Commercial properties are basically structured as 3+3+3 or 5+5+5. In other words, the property is leased for 9 years or for 15 years. The escalation in rate is at every 3 years or 5 years.

This type of property is usually one-sided where the tenant holds the right to vacate the property at any time whereas the landlord does have the right to ask them to leave until the lease period is over. A good investor would ideally prefer a long-term lock-in period.

Features of the Building

In order to fetch higher rents, capital appreciation, and better tenant retention a good quality building with B, B+ ORA features will attract a better quality of tenants.

Properties that pursue high quality are liquid in nature and do get sold much faster.

The Status of the Interiors

Usually, any commercial property at an initial stage is built like a bare shell covered with four walls.

The interior fittings in the property are done by the tenant as per their taste. As an investor, you should be clear on this front.

Avoid Being Duped by the Developers for Fit-out Rent

Always compare what would be the rent of the “to be furnished property” and that of “non-furnished property”.

If the Developer is doing the interiors of the property then the fit-out rent is not permanent and is generally payable only for a fixed period of five years. Beware of being deceived by the developers on this front.

Always Invest in Multiple Properties 

It is wise to make investments in multiple properties across cities to reduce variance in income. By diversifying your property you are likely to reduce the level of risk.

To sum it up these investing rules will help you quickly evaluate properties to generate consistent and significant profit for years to come.

To know more about how you can invest in commercial properties in Noida, contact us here without hesitation.