New investors often shy away from investing in commercial real estate. A larger capital is needed to invest in commercial real estate as opposed to residential. If you’re thinking of being in it for the long haul, commercial real estate may be the better option.
Difference in Clients
Residential tenants have the upper hand in negotiations simply because if they don’t like your terms, there are plenty of alternative options. Those who seek to rent commercial property come to your location already determined that their business can work there. They are more motivated to lease from you because there aren’t as many choices for commercial spaces relative to residential ones. This leaves you to be more creative in your lease agreements, and they are usually for the longer term.
Most residential lease contracts go for as short as six months to a year. Seldom will you encounter a longer term lease. This means you can be left with an indefinite length of time that your property will be left empty. Add to this the fact that you will also incur expenses when preparing for a new tenant. Commercial leases run for about three to five years and, if the business goes well, they may even ask to extend their lease longer. This means a steady flow of income.
Ready for Occupancy
Depending on how your contracts are negotiated, you or your tenant may be responsible for certain inclusions in the property. Such inclusions tend to lie primarily on the side of the landlord for commercial properties. Particularly for countries like the UK, HVAC installations are important. Installation services, such as M & E Maintenance Solutions Ltd, have to be called in to ensure these are correctly placed to avoid future issues, especially for multiple unit properties.
Investment funds are the primary influence on whether or not to invest in commercial properties. Consider, too, your dedication to the business. You need to carefully study your location and, if you’re buying a foreclosed property, the history of the property. Doing so can decrease the chance of failing in your venture, expands your real estate portfolio, and give your passive income greater security.