Thinking of Investment in Commercial Property should be known with this given advantage while investing in commercial property.
Commercial real estate investing is one of the most safe and sound avenues of creating long-term wealth and prosperity.
Many investors, who are not aware of the advantages of investing in commercial properties, still fall into the trap of residential real estate investing that offers lower returns.
Also, it is a myth that investment in commercial real estate property is not meant for small, retail investors.
Investment in commercial property is much easier and fruitful.
Everyone is looking for prudent ways of investing, in order to create wealth and prosperity. Real estate is indeed the topmost option when it comes to safe and sound returns on investment plus long-term capital gains. It is very difficult for one to choose between Commercial Property and Residential for investment purposes.
Is this a myth or perception that residential property is the best when it comes to investment and commercial property is only for HNI's? Well, there are many factors involved in the decision-making.
Let us quickly take a look at the advantages of Investment in Commercial property. This generic note will throw light on the fact that investing in either is not risky or meant for a select class.
Investment in Commercial Property is as lucrative as a residential property. It is just that one should be cautious before finalizing the deal.
- The minimum average rental yield is between 5-10% a year.
- Lease is usually signed for a long term. The minimum period is at least 4-5 years.
- There is an assurance of getting consistent returns from the investment made in this type of property.
- The tenants usually fall in the category of corporate channels, banks, business houses, or retail chains that have a good income to dispose of. It is very easy and convenient to deal with these types of tenants as there is no running around to chase the rent from such entities.
- Returns are assured in nature due to the clause of the annual increase in the lease agreement irrespective of prevailing market conditions.
- A quality tenant has a ripple effect and helps in better future rental yields.
- One can get several flexible financing options like Auxiliary financing where you can buy huge commercial properties without actually using any of your own money by getting almost 100% finance.
- The valuation of the property is usually based on the rent rates rather than the properties in the nearby area.
- Investments made in multiple units at one location, by and large, helps in developing proportionate savings in costs.
- There is a wide choice available like shop, office space, land, etc for one to endow.
- There is no additional cost of furnishing.
So in short investment in commercial property can be the next step that you look forward to deriving profitable returns.
The buyer should venture or be in favor of commercial property only if they have a clear picture of the overall property including
the reputation of the builder,
other environmental factors.
Though the biggest motivation here is the high rental yields but mind you that is not sufficient to nurture the business. Investors should always zero down on only those builders who specialize in commercial property.
Each type of commercial property is different from the others. These days the market is witnessing the trend of leasing commercial property instead of outright sale by the builders. Off late, the builders prefer to put the commercial property on a long-term lease and are not willing to sell them.