Mostly investors use to feel so much comfortable by investing in different types of residential properties. We all are actually familiar with the process of renting a Property or buying a new house. There are lots of different factors that we should consider before taking a decision to buy a new property or even renting the old one.
But if we take about buying a commercial property then obviously there are lots of different risks that are involved in this process so we should be more careful about it. Just like there are lots of terms and conditions that are related to commercial Leases, it also have GST implications and high rate risk of getting electrical safety certificate commercial property etc. so here in this article we are discussing important factors that we should consider before buying a commercial property.
Analyze the expected return on investment:
As we all know buying a residential property requires low risk and low return. As compared to this buying a commercial property means we have to invest more and there will be high risk and high return. So it’s very important that you do proper research about the location and business that you are planning to do in that particular area. So that you would know that yes investing in this place will definitely give you lots of return.
Consider the overall duration of leases:
Next thing that we should consider while buying the commercial property is to analyze the entire duration of leases. As we know that it’s a commercial property so that’s why it will definitely have much longer duration of leases as compared to this residential leases are almost 6 or 12 months long. But for commercial property leases you have to pay lease for years. So its very important that you opt for a lease package that is most suitable with your affordability rate.
Prefer to have durable tenant:
On the other hand if you are taking the commercial property on rent then it is very important that you do a little research about reliability of tenant. So that you would know that he will not cancel the agreement or contract. For avoiding this situation you should prefer to opt for government or big corporate tenant that is considered blue-chip tenant.
High cost of investment is required:
As we all know that buying the commercial property is very expensive as compared with buying a simple residential property. Before investing in CBD office or even in a retail space you should know that it is most expensive space, depending upon its locality. Basically Industrial property that is present on the borders of the city could be very expensive due to its huge area of the property that is being purchased.
Higher maintenance costs:
While buying a commercial property you should keep in mind that you not only have to pay the buying price but this property will also require proper maintenance. So before investing on such a huge level it is definitely the best to do the cost and benefit analyses so that after doing such a huge investment you didn’t face any type of loss.