Commercial
Investment Property, Commercial Investment Properties
The easiest way to define
commercial investment property from any other form of investment
property is probably just to categorize any form of property investment
that is not residential or used for people to live in.
This category of commercial
investment properties will then include shops or retail investment
properties, business premises for any type of commercial business,
industrial investment properties such as warehouses or buildings
used for storage or manufacturing, so basically any type of property
in which the tenants main reason for renting the property would
be different to using it as their home to live in.
Many consider commercial investment
property as a more unpredictable form of investment than residential
investment property, and it is advised that more research is done
when looking at commercial investment properties then residential
investment properties because of a number of factors including.
- Finding a tenant can be
harder, there are always people looking for some where to live,
business operators who may be suitable for your commercial property
may be as easy to find.
- Leases are generally for
longer periods, most commercial leases are for minimum of 1-3
years.
- Rental returns are generally
higher than the equivalent valued residential property, so although
it may be harder to find a tenant in comparison often the rental
return is higher.
- Insurance can be higher,
the point is if the property is a small shop for example it
may be exposed to more risk of vandalism or damage at night
while the tenant is not present at the property.
- Commercial property is
more expensive than a average residential property, particularly
if you are looking at manufacturing or warehouse or industrial
property.
- Some commercial property
like a old corner store in residential area, or older shop buildings
with street frontages can be good investments as there may be
potential for further development including incorporating residential
development into the site.
- Finance can be a lot harder
to get for commercial property investment, banks know there
is probably more risk involved so to qualify for a loan on an
commercial investment property you will probably need a higher
deposit possibly 30% and the interest rate charged on a commercial
loan would also probably be higher than that charged for a comparable
amount on a residential loan.
The point is commercial investment
property does become a bit more of a specialized field of investment.
As with any form of property
investment if you are considering commercial property investment
we advise you to do plenty of research into all the possible outcomes.
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