Commercial property is considered a profitable investment because it offers a high return on investment. But we all know rewards come with risk. And this holds for commercial real estate investment as well. A location that is currently bustling may become a space that is devoid of any people and activity after a couple of years. Also, you need to spend a good amount of money on commercial property repairs. That’s why it is essential to have in-depth knowledge of commercial property investment before jumping into it.
1. Discover the Property that Fits your Investment Goals
Everyone invests in an asset to get something out of it, and we believe that you are no exception. So, you need to think about what you want from your investment. For example, if you are thinking of investing in a commercial property that can offer you a steady income, a shopping centre may be a great option. In other words, the type of commercial property that best suits you depends upon your individual goals. Commercial properties include offices, warehouses, industrial properties, retail spaces and more. Talk to a property investment consultant about your goals, and they will help you narrow down commercial real estate options.
2. Budget and Location of the Commercial Property
Proper budget planning is essential for a commercial property investment. So, set a budget for the property and don’t forget about other expenses that are associated with property buying. Also, if you are planning to take a loan, decide how you will repay it. Location is another vital thing to consider while planning to invest in commercial property. So, discover a location that can meet the needs of future tenants. Good market research will help you find a property in a location that has a strong earning potential. However, along with the research, you also need to consider several other parameters such as accessibility of the location, businesses surrounding the property, availability of parking, level of competition and more.
3. The Property’s Physical State
A property that is in good physical condition is more valuable than a property that is in a poor state. Therefore, you need to conduct a thorough analysis of the property to evaluate its condition. Checking the physical state of the property will also help you know the time and money needed for repairs. The best is to consider factors such as foundation, roof, plumbing, electrical systems, water damage, and HVAC systems to evaluate the property.
4. Check out all the Legal Documents
Commercial real estate buying involves a lot of paperwork, so one needs to examine all the required documents. Go through all the papers to ensure legal compliance and reduce potential risk. Some documents that you must review before making a purchase are- a sale deed, mother deed, construction plan, encumbrance certificate, conversion order, possession certificate and many more. Also note that in some cities, one may also need a khata certificate. If you think you can’t do the documentation process on your own, consider consulting a property investment consultant which can ensure all the legal documentations are in place with property.
5. Evaluate Layout Plan
It’s vital to check the layout plan of any property that you are thinking of buying. A layout plan will help you know essential things such as the size of the plot, building lines, carpet area, and setbacks. It also contains information regarding the width of the existing and proposed roads, space for recreational spaces and many more. Therefore, we can conclude that a layout plan gives valuable insights into a property, giving you the power to make informed decisions.
6. Examine the Property’s Historical Performance
Checking the historical performance of a commercial property that you are thinking of buying or a similar establishment will help you know the growth performance of that property. Though past performance does not guarantee future performance, it will help you know your property’s strengths and weaknesses. Also, analyzing the past performance of the property will make you aware of the market’s future trends which will eventually aid you in developing a top-notch investing strategy.
7. Look out for Flexibility and Scalability
While looking for commercial property, don’t forget to look for such premises that provide flexibility. This is vital because your business will expand someday or the other, and changing to a new location will waste your time as well as effort. So, choose a premise that can be modified or scaled to meet your business needs.
Now! You are ready
We believe that after going through all of these seven points, you will be ready to buy a commercial property. This list may not include some factors that may affect your returns from a commercial property, but this list will help you buy a commercial property without making mistakes. If you want further assistance with commercial property investment, look no further than Nadar Properties. We will offer you the right advice and guidance.
