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Home » How To Invest In Commercial Property

How To Invest In Commercial Property

February 10, 2020 By The Saving Gal | This article may contain affiliate links. For more information visit our Disclosure

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How To Invest In Commercial PropertyResidential property isn’t the only type of real estate worth investing in. Commercial property can be just as profitable. In fact, there are many benefits to commercial property over residential property – you can consider alternative forms of property and you can offer longer leases to tenants to guarantee more security. Here are just a few tips for any first-time commercial property investors.

Consider the type of commercial property

Commercial property comes in all shapes and sizes. You could invest in office space, a shop, a restaurant, a warehouse or a factory just to name a few options. You then have the choice as to whether you buy existing commercial property or build your own property. You could even consider converting property for commercial means (such as turning a barn into an office).

Choose the right location

In order to attract tenants, your property needs to be in a good location. This should be somewhere that is accessible and in a reputable area. Research into the area before buying property/land there. The most prime locations tend to be the most expensive and you may have to charge higher rent as a result.

Choose the right mortgage

Choose the right mortgage

You can’t buy commercial property with a residential mortgage. If you’re planning on leasing property to a business, you’ll need to find a lender that specializes in commercial buy-to-let mortgages. Hiring a mortgage broker may be worthwhile for helping you to find the most affordable and secure mortgage.

Invest in the right features/improvements

You’ll improve your ability to attract tenants by also ensuring that your property ticks certain boxes. A growing number of companies want a property that is secure – upgrading doors or supplying alarms could help to gain tenants’ trust. Modern businesses are also caring more about their carbon footprint – if you’re building a property from scratch, it may be worth looking into eco-friendly construction. Other features to consider may depend on the type of property.  

Write up a legally tight lease agreement

Write up a legally tight lease agreement

A legally tight lease agreement is important if you’re renting your commercial property out to tenants. This agreement should tell tenants how long the lease is, what they are expected to pay for and what restrictions they may have when it comes to improvements. It’s worth hiring a solicitor to help you write up a legally tight contract.

Vet your tenants

Before you take on tenants, consider adding some screening measures so that you know your tenant will be reliable. This could include running credit checks and asking for financial records from a business (or a business plan if they are a start-up that is yet to make any revenue). If you choose to go through an agency, they will do these checks for you. 

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