Any form of property, be it residential or commercial, can be a great investment. However, the latter tends to be more financially rewarding compared to residential properties like single-family homes and rental apartments. Commercial property entails warehouses, rental buildings, industrial buildings, apartment buildings, office buildings, and retail buildings. This post will take a look at the benefits of investing in commercial property and the best places to do so.
Reasons To Invest in Commercial Real Estate
Stability & High ROI Potential
The primary benefit of getting into commercial real estate is the high potential return on investment. Commercial properties generally have a more significant annual rate, ranging from 6 to 12 percent, which is wat better than residential real estate. If the condition and location are good, you can even get a return of 14%. Also, the income is often consistent and regular in comparison to residential settings.
Appreciation of Property
A commercial property found in the right location provides higher income and appreciates over time. Moving businesses to urban settings generates retail and housing demands for your property. New developments lead to the increase of property value and this makes commercial real estate a lucrative venture when done right.
Triple Net Leases
Basically, the triple net leases concept is about not having to pay for expenses for the property as the owner. This includes real estate taxes, common area maintenance and property insurance. It implies that the lessee or tenant will handle all expenses related to the property, including estate taxes. As an investor, you will only have to cover mortgage expenses. Numerous businesses tend to sign such leases so that they can maintain a look and feel that’s in line with their brand. With such a benefit, it makes sense to venture into commercial real estate.
When you invest in commercial property, you can run and protect it under LLC. This tends to make things easier, simpler and more professional with your tenants. It is the business to business relationships that keeps interactions respectful and professional.
Considering Location When Investing in Commercial Real Estate
In order to enjoy the many benefits commercial real estate has to offer, it is important to get your due diligence, and this entails buying the right property from the onset. The location is, without a doubt, the most important aspect and before we look at the best ones, here are some things to look for:
-The population growth of the area, as it impacts the foot traffic
-Councils with substantial expenditure to boost infrastructure
-Suburbs going through gentrification
-Proximity to transport, malls and shops depending on the kind of property
-The location of car parking and the number of spaces.
-Security is another aspect that you can’t afford to overlook. Businesses and tenants need to feel secure when going about their lives and investing in a secure area increases the chances of getting a higher ROI.
That being said, here are the best places to invest in commercial property, as they meet the above-mentioned conditions:
Making a commercial investment in any of these regions in 2020 and when done right will certainly give you high returns.