There are both advantages and potential risks you should bear in mind if you’re looking to invest in a commercial property. Find more information on the pros and cons of investment property on MOVEHUT and make your search more effective with our information and help.
Investing in commercial property like all endeavours offers both positive and negative factors that you should it’s important to be aware of.
There are many advantages to buying an investment commercial property that could further encourage you to find an investment property.
For example, if you’re investing by buying and letting a commercial property, the terms of rent are normally more comprehensive than those of residential properties. This means you are more highly protected. For this reason, you will find commercial property tenants are much more careful with the property in terms of maintenance. Furthermore, the rental lengths with a commercial property are normally a lot longer, varying from 2 to 20 years. This means, you will enjoy a more secure and potentially greater income by becoming a commercial property landlord.
Moreover, commercial tenants are typically required to give long notice before the contract expires or whether they intend to renew or relinquish their lease. This gives a commercial property investor high protection as it allows plenty of time to look for a new tenant. The notice of period can be anything up to six months or could even be more.
Conversely, there are also a few potential risks that you may want to consider.
For instance, if you fail to find tenants for your property for a long period of time, not only you would lose on rental income, but there are additional business fees you would be required to pay. Examples of the additional costs can include non domestic rates, commercial insurance and the maintenance costs, which can add up to a considerable amount. There can be a number of reasons to why you may find it hard to find tenants. For example, there is always market risk, this means depending on the market you’re in and what type of investment property you have, your tenants’ businesses may become unviable due to recession.
So when you’re planning to invest in commercial property it is key that you look into the pros and cons, as this will contribute to an effective search for an investment property.
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