Ideally, commercial real estate refers to those properties which are widely employed for business activities. From hotels and offices to schools, shopping malls and hospitals, a commercial property can be used for operating any kind of business. However, when it comes to investing in real estate, it is always advisable to consider certain factors that will help you earn higher returns for the future. Below are a few pointers to keep mind before buying a commercial property:
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Location
While narrowing down on commercial property for a real estate investment, location is the primary criteria that you need to focus on if you wish to earn long-term returns. It is always a good idea to invest in commercial properties that are fast appreciating and offer high scope for rental income. Ideally, you need to invest in real estate micro markets that are suitable for commercial leasing. Take a thorough inspection of your locality taking into consideration factors such as well-established transport systems, infrastructure development, accessibility to key hubs and warehouses, proximity to airports, railway stations and ports.
Scope for marketability
If you are expecting robust cash flows from your commercial property, great location is just not enough; your building must have the ability to attract tenants all through the year. In this regard, the quality of buildings is of huge importance to enable higher tenant retention and capital appreciation. It is important to look for buildings that offer the latest technical specifications and superior design and structure. You can attract a pool of tenants according to the nature and quality of your commercial property. For instance, if you are investing in a commercial property that consists of office spaces, then you can’t think of renting out your property for industrial activities.
Documentation
Before investing in commercial property, it is important to do a thorough verification of the necessary documents. You can take the help of a lawyer to double check documents such as title deed, construction permits, property taxes and utility bills. In case, if the building is leased or rented out, it is extremely important to check the necessary agreements. To avoid surprises in the future, you must ensure if there any legal obligations associated with your property. It is mandatory to check whether any security mortgages are taken in the name of the commercial property that you are likely to invest.
Facilities and Amenities
For a commercial property situated in a great location, having state-of-art-infrastructure is a feather on a cap. It is always a good idea to invest in a commercial property which offers a plethora of amenities and facilities. Look for facilities such as adequate car parking, cafeteria or food courts, essential retail facilities, sports arenas, advanced security systems, 24/7 power backup and internet services. If you are a buyer looking for high returns, then it is your responsibility to provide as many amenities depending upon the size of the commercial property that you have invested on.
Tenant profiles
Understanding the different types of tenants available in the commercial market is crucial to ensure a good rental income for your property. In case, if you are investing in a property with tenant occupancy, then it is important to take a thorough investigation of the financial stability of the business. To ensure continuous income flow, it is important to lease your commercial building to successful business houses rather. Unlike residential buildings, commercial leasing is done for several years, so as a landlord it is important to understand the types of rental agreements employed in your building.
If you are looking to diversify your investment portfolio, commercial real estate is a great choice. To make a wise decision, it is always a good idea to consult a legal expert.
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