Should I Invest on a Commercial Property?

Commercial property usually refers to office building, industrial building, apartment building, retail building or even mix a retail, office and apartment .Don’t forget by investing on each of this commercial properties, you may face different type of management.

Some advantages of buying commercial property are listed below;

Income potential: Generally Commercial properties have a yearly return off the purchase price something between %6 to %12 which is much higher than single residential property. This return percentage depends on the area and it is much higher than the single residential property which has the return off the purchase price around 1% to %4.

Public eye and better maintenance: Commercial tenants usually maintain the property much better than the residential tenant because they it has direct effect on their business.

Professional relationship: most relationships on commercial property are business to business and formal.

Less hours of operation: business owners mostly go home at night and by using night alarm monitoring service you don’t have to worry receiving call at night time.

Easy to increase the rent: It is easier to evaluate the commercial property rent by asking the owner’s income statement.

Less worry about Expenses on property: The lease on commercial property handles all property expenses directly, including real estate taxes and the only expenses you need to pay is the monthly mortgage.

Like every other investment, there are some downsides of investing in commercial property and you may consider before you any investment.

Time commitment: You cannot be an absentee landlord and maximize the return on your investment, you need to be present physically and be in touch with all your tenants.

Professional maintenance and help required: If you are not professional then you need to hire a property manager to help with emergencies and repairs and you may need to add it to your expenses.

Bigger investment with more cost: You need to put more down payment to own a commercial property and some costs may surprise you, so you need to have more cash in your hand in case of large upcoming bill such as roofing or plumping repair.

More risks involved: since commercial properties shave more visitors every day, therefore there is more risk that cars hit patrons in parking lot, people slip on ice during the winter and many other unexpected accident.

With gathering all these facts, you are the last person who can decide which investment works for you.