Challenges faced by investors buying Commercial Property
The real estate market consists of different types of real estate property. The growth and development of the real estate market depend on how the various properties show growing trends. The two major property types contributing to a country’s real estate market growth are residential and commercial property. Investing in both types of real estate properties have its advantages and disadvantage. First, it is necessary to understand what commercial properties are. Commercial properties are those immovable properties used by industries or commercial units to carry out business activities. For example, office
buildings, shopping malls, grocery shops, and other business centres. When investors buy Commercial Property, they get many advantages compared to residential properties. It is one of the safest investments with low initial and maintenance costs. Purchasing a commercial property through a suitable platform always turns out to be a profitable deal. Myre Capital is one of the real estate dealing platforms, helping investors to take the right decision before investing their capital.
Challenges in investing in commercial property
The investing practices will also differ when residential and commercial properties are different. On the one hand, investing in residential is relatively easy, while investing in commercial properties has some significant challenges. Some of the challenges faced by investors when they buy Commercial Property are:
Requirement of due diligence
Due diligence of commercial properties is complex compared to residential properties. Legal title, clearance from state authorities, sanctions, and tax liabilities are some essential aspects that are checked during commercial property due diligence. So, carrying out due diligence is an additional task that is required in buying commercial property. To meet this challenge, it is always good to take advice from a third party who can help out in this process. Several real estate dealing platforms assist investors in getting due diligence done.
Getting Quality tenant
When a commercial property is rented to a genuine and well-known tenant, the property’s value is enhanced. For example, when a commercial property is leased to multinational companies, they pay a good amount of rent and deposit, leading to capital appreciation of commercial property. Good tenants are hard to find, so it is one of the challenges in buying and investing in real estate property.
The residential property lease structure is more straightforward than commercial lease structures. Usually, it is seen that a lease of commercial property is taken for a longer duration, say five to ten years. It may be in the five plus five years and have a lock-in period. It may be possible that the tenant may leave the property in between. The landlord cannot ask the tenant to leave the property.
The cost of Interiors
Before investing in a commercial property, the investor should make clear the cost of interiors to be done. In our country, it is mainly seen that commercial properties are handed over to tenants with zero interiors. Sometimes, tenants are responsible for doing all the necessary property interiors. While in some cases, the owners make it. So, at some point, the additional cost for interiors seems to be burdensome.
Location is the top influencing factor in increasing the value of a commercial property. Location is everything. Investors should always consider investing in commercial property at a location with fewer vacancies.
If you are planning to buy Commercial Property and looking for the best options to add greater profits to your portfolio, investing through real estate dealing platforms is the best option. Myre Capital is a one-stop solution for all your real estate investments. It works on pooling investment methods and ensures better returns for every investor.