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Thinking With Your Commercial Cap On

rome-1618323_640It is easy to understand why so many business people have invested in commercial property, the returns can be staggering. However, there is a general rule of thumb when it comes to investments with big rewards: it isn’t easy. Commercial property is a niche market. It’s a specialist investment with e a lot of nitty-gritty aspects to it, and that means considerations need to be made with real care before any purchase is made. That’s where we come in. We have collated advice from people who have invested in this sphere that we hope will help.

What Are The Basics?

The main areas within commercial property cover real estate such as offices, industrial buildings, warehouses and retail premises. However, it also expands much further to include facilities such as leisure, sporting, medical and much more. When it comes to purchasing a commercial property, the main questions you should be asking yourself are a) is the location good b) will the premises attract tenants c) are their external factors that may positively affect a tenancy in a way that will allow rent to be increased,, such as planning proposals and possibility to expand and d) is it future proof.

Current Tenancy

A lot can ride on the tenant that currently occupies the property in question and that is because their financial stability will have an immediate impact on the true value of your investment. It will also improve your chances of having a steady income that offers longevity. That is what you want from a tenant because if they run into financial trouble and fail to pay rent, you could find yourself in more financial trouble than you foresaw. There will be the costs associated with your purchase of the property, as well as upheaval costs in restoring the property to a standard that potential tenants will be attracted to.

Know The In’s And Out’s

The first thing you should study and research are the current lease terms that are in place. This will have a direct impact on the value of your investment. However, it is also worth knowing about the legalities too, especially those that will help you grow your investment. One of then most common terms circling the investment property world is a 1031 exchange. This is essentially a way for you to swap your business asset for another and is commonly used to avoid, or limit, the amount of tax due at the time of exchange. Details like this can save you a fortune in capital tax gains, while your investment continues to grow tax deferred. As such, it is well worth getting an expert company on board to show you where you are able to make killer savings and massive gains.

Multiple Tenants

These can be an incredible source of revenue, but it is also worth noting that there will be more expectation on you to deliver when it comes to disputes. These are typically regarding areas considered to be common ground, as well as external areas, structural repairs and maintenance. That is why we recommend you employ a managing agency to oversee everything and save yourself a headache.

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