We are all familiar with the concept of residential property investment, however, commercial property investment is something that most of us do not have much knowledge on. There are number of advantages to this form of investment, and it is performing a lot better than the stock market currently. Don't be put off by the relatively high cost of commercial property as it is possible for syndicates to buy them now.
Commercial real estate investment has a number of advantages, so here's an introduction to this topic so that you can keep this in mind when considering your next investment. Let's start at the beginning...
Growth
The financial benefits can be good, if you make a sound decision on what to buy, not only will you gain from the capital growth, you will also acquire a very profitable income stream. A return of between 8% and 20% per year.
What to choose
It's best to choose a property that is in a location of high tenant demand and is in a good state of repair. Taking professional advice on this matter would not go amiss.
Leases
Leases for residential properties are usually available for just 6 or 12 months duration. A commercial property has a lease for a much longer period of time, that can be from 5 or even up to 10 or 20 years. A commercial building may take longer to rent out, but when it does you know that you are covered for that many years. Quite often the lease will be for an initial 5 years and then an option for another 5 years.
Less emotional and flexible sellers
Sellers of commercial buildings are not so prone to have emotional attachment to their warehouses or factories and will be more flexible on the sale. It could be that they even work out a finance package for you as the buyer.
Repairs are paid for by tenants
Yes, that's right! The repairs and maintenance, within reason, are usually paid for by the tenants. Now that's refreshing news for any landlord to hear.
Selection of tenants
When accepting a tenant, consider that ideally you would want a well established company that is unlikely to fold. You don't want to end up with a property without income.
Commercial property currently available include this 4.6 acres of land with 57,000 sq foot of office and warehouse space on ther perimeter of
Bridgetown, Barbados for 5.65million and a freehold shop for sale offering approx. 330 sq ft of retail space in a good location in
Dominica for US$53k.
If you do your homework, all in all, commercial property investment can be a wise decision and can bring you a good return on your finances.