Investing in commercial property
If you want to invest in commercial property, you may have some knowledge and experience, or you might be having none. You might not be having even the slightest idea about this business, how to finance it, and what to expect from it. Below are the first things you should consider before investing in this business.
Where do you want to invest?
Do you have any area or location in mind that you want to invest in?
You can perhaps choose a property for commercial purpose that is close to where you work or live since you are familiar with it. Get to know the kind of businesses there and then approximate the success level of the area.
You can as well opt somewhere unfamiliar since it has the probability of yielding a more significant return on investment over a period of10 years.
How will you invest?
While you are thinking of the kind of returns as well as the location that you will invest in, you will required to think on how you will invest too. Below are the two most common methods:
• The Direct or the ‘bricks and mortar’ fund, whereas the fund, is the owner of the property. You will have ownership of just a part of the property. Thus, you will be receiving some of the rent if there are any tenants. You might not get anything, especially when the houses are vacant.
• The Indirect commercial property fund: whereas you purchase shares in a company that invests in this business
Level of investment and return
Property commercial investment might begin from the same level of residential property to a larger scale that might bring high risk. Decide on what you can manage to pay for (counting any continuing costs for the duration of the investment). Also, decide on the type of property that you can get at that particular level of investment.
Long term or short term investment
Contemplate if you want a long or short term investment. Among the most common pitfalls in property is reflecting too much on the short term, and forgetting the long term.
Timescale
Do you have any timescale in mind?
Do you exactly know what you need, where, and the way you are going to fund it?
Are you carefully learning the market to know what is producing a good return on investment?
Lease or purchase
This will depend on your situation, the knowledge you have as well as the experience. Settle on whether you want to purchase or lease the property that you want to invest in. There are advantages and disadvantages of both options, thus start what you feel essential for you. Also, try to get professional advice to help you determine the best option for you.
Risks involved
Properties planned for a commercial usually is accompanied lots of risks because incidences are generally very high in commercial properties. Therefore, if you are not a risk-taker, you need to think big before investing in property.
If you are totally new in this business, it is advisable to seek guidance from various professional sources like people who have previously invested in this business. The industry has many pitfalls, regardless of your experience. But with guidance you will make it to the business you want. In very business regardless of how small it is it requires research and a prepared mind that you can either have a profit or a loss. Also competition is something you have to be a where off. To be successful in any business you have to be different and delivering the best services.