Investing in real estate is a popular and reliable option for a lot of people who are trying to preserve and grow their wealth. Still, even here, you have a major division on whether you invest in commercial or residential property. The reasons to opt for the first are quite numerous, ranging from the fact that you get a regular stream of income (more reliable), a high appreciation, and the ability to leverage with great efficiency.
Also, there are some subjective factors like intrinsic value and pride in ownership that come from holding such a valuable asset. Lastly, try not to forget all the tax benefits that come alongside this, as well as the fact that there’s less competition in this field. All of this put together gives you more than enough reasons to invest in commercial property. Here are five tips to make your investment career as successful as possible.
Different types of commercial property
The first thing you need to understand is the fact that there are many different types of commercial property. First of all, you have offices and warehouses. Second, you have retail centers. Third, there are venues in the hospitality industry like hotels and resorts. Finally, you have the land development field. The reason why it’s so important for you to get a grip of this as early as possible is due to the fact that everything from returns, management, and development of the property is affected by this type. The sooner you figure out where your money goes, the sooner you can start doing your research on the subject matter.
Know what return to expect
Another thing you need to understand is what kind of financial return you can expect from these properties. In general, there’s this thing known as a 1 percent rule which implies that you should see at least 1 percent of monthly value return through rent. Keep in mind, though, that these rents of 1 to 2 percent are only true for residential properties. When it comes to commercial property, about 4 to 5 percent per year is closer to what you’ll see. Keep in mind, however, that the figure is a lot higher, seeing as how the total value of the property is much higher as well.
Talk to professionals
Another thing you should understand is the fact that talking to professionals before investing might be the only way for you to stay safe in this field. So, consult expert property buyers in order to see whether the investment that you’re trying to make it worth your while. Also, keep in mind that when searching for an agency to work with, you should usually focus on local talent. So, if you intend to get a property in Sydney, you need to find a reputable property buyers agent in Sydney. This way, you can schedule a face-to-face property planning session and get an insight from someone who knows the local market in-depth.
Previously, we’ve briefly mentioned the concept of property management and, in the commercial real estate, it can make or break your investment effort. Some commercial assets may require daily involvement and if you can’t do it on your own, then it’s your job to find someone who will be ready and willing to tackle this task for you. Just bear in mind that, in this particular case, their direct involvement will directly affect your returns, which is why their skill, work history, achievements, and portfolio bear so much weight. A great property manager is quite hard to find but is probably also worth their weight in gold.
The concept of property development is yet another situation-specific requirement that you have to pay attention to. Unlike with buying your own home, a field of property investment is something that people engage in for the long-run. This means that you’ll have to specialize in either buying, fixing and flipping these facilities, or generating rental profit. The reason why you should make a choice is due to the fact that it affects how well you handle some of the day-to-day tasks that are put in front of you. In other words, you need an adequate strategy and this is only possible if you know exactly what you want.
In the end, whether or not you get disappointed by your investment choices mostly depends on what you expect. By setting some realistic expectations, getting the right counsel, and doing your own independent research, you’re far more likely to end up being quite satisfied with your investment. As always, it’s up to you to make a name for yourself in the industry.