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If you’re looking to invest in real estate, commercial property is a lucrative option. With the current boom in the global commercial arena, the returns are extremely profitable. However, there are a set of guidelines that you need to adhere to. Having in-depth knowledge of these guidelines can help make the entire process of buying such property, a smooth one.
Benefits of Investing in Commercial Property
There are certain benefits that come along with a good investment in the commercial sector. First of all, these investments can turn out to be great assets that can secure your investments from currency devaluation and economic instability. The possibility of widening your range of investments and the extended lease periods that often characterize commercial properties, are added benefits.
Things You Need to Look Out For
When scouting for a commercial property to invest in, you need to zero in on the right places. Taking into account certain variables, and making an informed and wise decision, are crucial parts of the process. Here are some pointers you need to look for when presented with an opportunity to invest:
1. One of the most important things that you need to look into is the location of the property. Investing in a property that is located in a micro market could spell disaster. Micro markets are typically characterized by large vacancies. This means that the growth rate of that particular area is stagnant. Hence, before investing, it is paramount to carry out proper research and find out if the location has good market growth.
2. There are also advantages that come along with certain types of properties. Retail and office spaces in particular, are proving to be more beneficial than other types of commercial properties.
3. Another aspect that you need to look into when you invest is the rental yield. In contrast to residential properties, the amount of money you stand to make from a commercial property is the main factor that decides its value. So instead of looking at appreciated resale values, you would be better off looking for a return of around 10-12% per annum on rental yields.