More and people are nowadays considering investing in the real estate sector. Commercial rental properties have become a common and logical investment choice. But like any other investment opportunity, it could prove challenging if not approached with due diligence. Here are some important factors you need to consider before taking the plunge.
The main aim of investing in commercial rental property is to make a profit. Therefore, before you invest your money into any property, you must ask yourself and even consult just how profitable your investment will be in the short and long term. Check very carefully if there are other hidden costs you will incur before you invest. Basically, this is an analysis of how much you are putting into the investment against the RoI you intend to reap out of it.
The location of the property is very important as it will also determine your returns. Make sure you check the location of the property well and invest in a property that is easily accessible by means of transports. You should also check if there are support services like security systems, parking, and any other that you may find relevant to you. These auxiliary services will not only add to your convenience and accessibility to your property, but will also be instrumental when setting the rental fee.
The location you choose will determine the type of tenant you will get and will also majorly affect how much you price your property. So be mindful of the places that will not fetch you attractive returns and even lower its resell value.
3. Availability of funds
How much are you looking to invest? Do you have access to the funds you need to invest in the property you desire? Are you going to make a down payment first? Are you taking the funds off your savings or are you looking to borrow from lenders? These are questions you must ask yourself when you want to invest in any property.
You need to plan well and draw up a budget, this will also help you decide and select the rental property that best fits into your budget.
You need to make sure that your property is easily accessible. Find out how far it is from the nearest highway or even from the subway. Check if it can be accessed by large trucks if need be and if the building has wheelchair ramps. Also check how far the parking is and if there are major distributors nearby. This will help your renters decide whether the property is fit for habitation or not.
Check how long one may need to drive to access other amenities like hospitals, hotels, and restaurants because this will help you and will hike the value of your property in future.
Before you invest in a commercial rental property, ensure you find out how secure the place and neighborhood is because this will be a major factor when people are looking to rent for their businesses.
Find out if there are security systems in place and what the crime rate of the said area is before investing your money. This is a very vital factor. Renters are likely to stay away from areas with runaway crime, and you shouldn’t invest your money in properties located in such areas either.
You might not know what type of tenant will rent out your property, but in any case, everyone wants a place that is physically appealing. If it is a building, make sure that it is not run down and check well if it meets compliance standards with relevant authorities. Also important is the overall look of the neighborhood surrounding your investment property. Does it offer a great view? Many renters of commercial buildings will prefer a property that overlooks a highway, market or other busy areas.
Needless to mention, you might want to invest in more rental properties in the same area in future. Therefore, you should also check to ensure that it will be possible to expand.