10 Reasons to Invest in Commercial Real Estate

Whether you are looking for headquarters for your new or developing business or you’re looking for safe investments, the answer is commercial properties for both of these scenarios. While it is true that commercial property investment requires a bigger financial sacrifice, the return-in-investment will be much more consistent than in the case of private properties. Plus, these investments are more secure for the long-term. If you choose a commercial property with great potential, you’ll have nothing to worry about for very many years.

How to get your hands on profitable commercial properties? A reliable commercial property listing is just what you need to check your opportunities in this sector. Considering that you’ll end up spending a lot of money, opt for listings that give you succinct and valuable information. There are thousands of currently listed properties out there. When it comes to commercial properties, location is a very important factor.

Are you still having second thoughts about investing in commercial real estate? To help you make an informed decision, there are the pros and cons of such a decision mentioned in the following lines. Just like in any other type of investment, risks exist and you need to be aware of them. Only this way you’ll be able to invest wisely and enjoy a secured future from a financial point of view.

Why is it such a good idea to invest in commercial properties?

• Their potential for profit is more significant

Without a doubt, owning a commercial property will open doors toward a more significant profit. The earning potential of such properties is much higher than compared with residential properties. Commercial properties can return, each year, 6 to 12% out of its purchase value. Of course, this depends very much on the location of the property and how it is valued by the tenant. But, nevertheless, it is better than 1 to 4%, which is the percentage in the case of residential properties.

• The possibility to create more business relationships

You don’t have to be a business owner to benefit from having more business relationships. Who knows, maybe you will end up starting a business, case in which the business relationships you acquired will come in handy. Not to mention that these relationships are very useful for those that already run a business. So, if you’re looking for ideas to get more potential business partners or relationships, owning a commercial property will get you there.

• Tenants will be interested in maintaining and increasing the value of the property

The best part about owning a commercial property is that both the owner and the tenant are interested in maintaining the value of the property, if not even increase it. The truth is that the public, more precisely potential customers, are attracted by properties that look presentable. Thus, it is important for the storefront and the store itself, or inside and outside of the property, to look good. As an owner, this will mean more benefits for you, as the tenant will want to invest in the improvement of the property and take better care of it. As you probably know, when it comes to private properties, the landlord or owner usually has to deal with a range of damages and repairs.

• You don’t have to be available around the clock

One of the advantages of owning a commercial property is that activity on the precinct happens only according to a specific schedule. So, if anyone will need to reach you, this will happen within the work hours. No phone calls late in the evenings and, in most cases, no phone calls during the weekend. You’ll practically have to work just as any other company or business does.

• The value of leases is much higher

Besides being able to get much higher rents for a commercial property, as an owner, you don’t have to cover any expenses with the property either. The person or company renting the property will take care of that for you. This doesn’t happen in the case of private properties, where the owner has to take care of all the expenses generated by the property. So, the only income is the rent. In case you loaned money to invest in a commercial property, the sole expense you’ll have to keep in mind is your monthly mortgage.

• The lease terms are also more flexible

Commercial properties also enjoy more flexible lease terms. There aren’t so many rules and state laws in this case, so it’s much easier to reach the desired agreement. It’s much easier to handle a commercial property from all points of view.

The cons of such an investment

• This kind of investment will require time from your side

Unlike private residences, commercial property investment will require more time and attention from your side. If you really want to have a consistent return on investment, you will need to be a present owner that is interested in his lease contracts. Also, it is possible to have multiple contracts at once, which also means more time.

• You will need the help of several professionals

From getting the best pieces of advice for your investment and up to the maintenance of our property, it’s always best to hire professionals. Even if you are a DIY-type of person, you won’t have time and it’s not recommended in most of the cases to do some things on your own.

• The initial investment will be rather large

It’s easy to see that you’ll need a bit more money to invest in a commercial property in comparison with the sum required to get a private property. Commercial properties are more expensive due to their potential and usually larger size. But, at the same time, it could be easier to get a loan for making such an investment, then to get a loan for a private residence.

• There are quite a few risks to consider

Investments almost always come with a set of risks. Some of the most common risks are the damages that can be made by the high number of people coming on the property on a daily basis. Also, you will have to make sure everything is clean during the winter, like no risk of falling on ice or for icicles to fall off the building and to cover any acts of vandalism if they occur. And these are only some of the examples of incidents that could occur when owning a commercial property.