It can be a good opportunity investing in any type of property whether it’s residential or commercial. But, typically residential properties offer lesser financial return than commercial properties. Also, there can be more risks. In order to play safe, just evaluate the pros and cons of making an investment in commercial properties. It is important in making a right investment decision. But before that, let’s have a look on what all Commercial properties include:
- Manufacturing units
- Retail buildings
- Office complex and premises
- Buildings with mixed use. Such type of property may have a mixed type of use such as office, retail and apartments.
- Apartment buildings
Here Are Some Of The Benefits Of Preferring Commercial Real Estate While Investing
- It is easier to evaluate the price of commercial land. As per David Giunta, CEO of BlackPlum, it is easier to estimate the prices of commercial property. It is because you have the option to request the income statement of the current With the help of current statement, you can easily conclude the basis of price. Whereas, pricing of residential properties issubject to more emotional.
- You will deal with many professional parties while buying a commercial one. The main reason for this fact is because the commercial properties are usually not owned by individuals. Mostly they are LLCs and control the property as an occupational. Here, both the involved parties maintain a business-to-business relationship. This B2B relationship helps in keeping the deal professional.
- They come with an income potential. It may be the possibility that some business is already up and running in that commercial property. By that, it would be beneficial to opt to invest in the property due to its earning potential. Commercial properties usually have a higher annual return on the purchase price, i.e. between 6% and 12, as compared to single family home properties.
- Consider the limited hours of operation, a commercial property has. It is because the businesses generally operate within daylight. You will not encounter problems such as any emergency calls or fire alarms while managing a rented commercial property. It is also more likely to have an alarm monitoring service in case of commercial They will notify the authorities if anything happens at night. They will notify the authorities if anything happens at night.
- David Giunta shares, the level of management is also on a high side in case you own a commercial retail building. You have much more to take care of than you do with a non-commercial investment.
- You can get more flexibility in leasing a commercial property.A less number of consumer protection laws oversee commercial leases. Whereas there are dozens of state laws covering residential properties, such as termination rules and security deposit limits.
- You have to worry less about tenants being maintaining the property in case of commercial building. Retail tenants have a conferred interest in maintaining their store and its front. If they don’t do, it will disturb their business directly.