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6 Tips to Invest in a Commercial Property

Author
Blox Social
Posted on
Jan 22, 2023
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While real estate investment is considered one of the safest bets in the 21st century, the process leading to the final purchase is extensive. Though capital is one of the primary requirements, a buyer needs to develop a plan of action involving various activities. With the real estate market expected to touch an astounding ₹13 lakh crore, one needs to understand what investment suits them the best. 

The real estate sector mainly consists of two categories, residential and commercial. Concerning investment, this is a subjective decision, depending on cost, ROI, maintenance, rent, etc. However, commercial properties usually have the edge regarding ROI despite involving more funds. A fast-growing market with increasing demand, let's find out some of the benefits an investor could reap.

  • Offer more stability in terms of cash flow when compared to stocks, shares, and bonds.
  • Commercial properties offer a high appreciation value.
  • Comparatively, less maintenance is involved in retail investments as, in many cases, the landlord takes care of this. Since the tenant wants to attract customers to their retail shop, they make extra efforts to maintain the property.
  • Commercial investments help increase equity substantially.

Different types of commercial buildings

There are majorly four types of commercial properties.

  • Office space
  • Multi-family rental
  • Retail spaces
  • Industrial uses

Some others are hospitals, hostels, schools, colleges, and warehouses. Some of the top cities for real estate investment are the following.

  • Navi Mumbai
  • Pune
  • Chennai
  • Delhi-NCR
  • Bengaluru

Now that we have the necessary information, let's look at six tips before investing in a commercial property.

1. A must-do research

Given the investment involved, a potential buyer must allocate sufficient time to their research. Before deciding the type of investment, study the market trends, and understand the future scope of development by having an idea of the upcoming projects. Sometimes investing in a place with great potential in the future is better than putting your money in a well-established location. 

2. Select your investment option

There are a variety of options available for commercial buildings when it comes to investment purposes. Nonetheless, the buyer needs to know what fits their bill, with some popular choices being retail shops, office buildings, and various other types of social infrastructure. The location plays a critical role while making such decisions.

3. Do not hesitate to take advice from experts

Investing in a commercial property requires proper knowledge, given the array of industries, from retail to office spaces. Hence, one must consult financial experts, property consultants, and even lawyers if needed. Planning a budget or obtaining a loan requires the correct knowledge.

4. Develop a layout plan

Layout plans are vital in operational efficiency, be it office space, industries, schools, or hospitals. Effectively utilising space with the necessary renovation and design helps you reap more monetary benefits. 

5. Background checks of the tenant

In leasing out your commercial properties, it’s necessary to know your tenant's background, for example, the type of business, pending court cases, criminal record etc. Not carrying out these protocols could lead to unforeseen damages, including delayed payments and harming the landlord's reputation.

6. Builder’s goodwill and reputation

A builder’s reputation and goodwill prove that the buyer’s money is safe, providing the latter with relief, given the capital involved. Therefore, the buyer must study the history of the developer as well as their recent projects.

Though a safer bet for generating ROI, it is necessary to do their due diligence before making a commercial estate purchase, given the amount is much more when compared to a residential real estate investment. 

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