Investing in Real Estate can be a tricky task for someone who is not a common investor. The investor needs to be patient and do proper research before taking the final step. Following these simple principles of long-term investing can help them earn much higher returns than most debt instruments.
- Location – Searching for the right location is extremely important for an investor. The returns that one earns through the commercial space for sale are majorly based on rental income and property appreciation. Both of these are largely dependent on location.
- Amenities – Amenities can add value to the property. Amenities can include things that can make living slightly more comfortable for the tenant such as extra parking area within the commercial space, lift facility, metro connectivity or a food court. Such amenities can enhance the space while increasing the marketability of the property.
- Property’s Risk – The type of risk on a commercial space property and residential space property can be disparate. While investing in a commercial space, the investors must look closely at the zoning changes which can cause the property to become residential as new suburbs develop in the area.
- Market dynamics – A smart investor will always keep in mind the existing trends of the market. Historical market performance over the last three to five years should be analyzed to figure out any anomalies or potential for reduced demand in future. Besides this, in order to get more clarity on the financials of the property, an investor must map out details like the tenant profile, the rent roll out and the lease contract (expiry date).
- Property Documentation – An overall check on the documents is important since it will help the investor get a better idea of the legal work that he needs to look for. This includes papers related to mortgage and ownership transfer (in the case of resale property). One can take help of an agent to calculate the complete cost of the space and hidden expenses.
- Diversify the risk – Investing all of our savings in one property is not a wise decision. Its better to split our savings and invest in more than one commercial space in order to minimize the risk.
Next time you plan to invest in a commercial arena, keep in mind the above listed things and sail your way smoothly!