Commercial property: To buy or not to buy?

Buying commercial property is usually a top priority for a lot of investors but is it really a step in the right investment direction for everyone? For one, it can turn out to be a lucrative endeavour if done wisely, but it also comes with a lot of risks that if not carefully navigated, one might end up incurring major losses. Some of the reasons you should highly consider investing in commercial properties include: 

1. The rate of appreciation makes for great returns 

Commercial properties make for great investments due to their consistency when it comes to how fast they appreciate as compared to other investments (Visit PropList). This is especially evident when you make cost-effective renovations that serve to make the piece of property more alluring. By making such upgrades, the value of your property increases over time, and if you decide to sell in the future, you can expect impressive returns. 

2. Your property can serve as a source of income 

By leasing your property, you can receive a steady source of income through rental payments made by tenants. Moreover, property leases have historically always gone for much higher rates when compared to residential properties. Another added advantage is the fact that tenants that rent commercial properties usually inhabit them for extended periods, so your property will most likely never lay totally vacant. Taking all these factors into consideration, investment in commercial properties brings in greater returns than stock investments. 

3.Provides means of spreading risk 

Investment in commercial properties is a great way of reducing risk, as compared to investment in residential properties, where you face the possibility of incurring major losses if the market crashes. On the other hand, commercial properties provide you with many options to fall back on, especially if you let it to a variety of tenants. 

4. The value of commercial property is intrinsic 

Unlike most investment ventures, real estate properties have intrinsic value, which means that even if the tenant you lease your property is unsuccessful in their business, you will not be impacted negatively. This is especially true if you manage to secure property in that is in good condition and is situated in a prime location. This is why this line of investment has earned a better reputation than the stock market. 

5. You have more control when it comes to modifying the property space 

As long as the commercial property is in your ownership, you are free to make overhauls on the property as you see fit. Furthermore, you are in a better position to obtain planning permission for change of use of a commercial building as compared to a residential one. 

Some of the hurdles you may have to overcome when it comes to investing in commercial properties include: 

-You will have to consider additional costs besides the preliminary purchase price such as environmental report; stamp duty and land registry fees; estate agent, surveyor and solicitor fees; and VAT fees. 
-You may be subjected to applying for a commercial investment mortgage. 
-Legal Considerations. 

In conclusion, buying commercial properties is a great form of investment with great returns, and relatively reduced risks, but it is also important to consider if the benefits ultimately outweigh the costs.

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