Investing in a commercial property with the intention of renting it out can be a lucrative venture. There is more of an initial investment, but as the saying goes – the higher the risk, the higher the reward. It’s important when purchasing any property to make sure you are getting a property that can maximize the return on your investment.
Here are the top 10 features of a profitable commercial rental property:
- Neighborhood
‘Location, location, location’ doesn’t just apply to residential properties. Your property should be in a desirable place for your potential tenants. Businesses don’t want to be seen in run-down areas of a city, or in places where there are no other draws to the neighborhood. Properties located close to main roads and surrounded by other established commercial spaces will be more sought-after. This is definitely something to keep in mind when looking for industrial units Wimbledon or any other place for that matter.
- Transportation
People need to get to work, and more and more workers are taking public transportation. A building close to a subway or bus stop will be much more desirable than something off the beaten path. As such, a building with ample parking will also have more value.
- Amenities
Even with commercial properties, business owners like there to be things like parks and restaurants to be nearby to keep the staff happy.
- Property Taxes
Taxes fluctuate depending on the neighborhood, and higher taxes are not necessarily a bad thing. Higher taxes can mean that the location is very desirable, and you can charge more rent. However, lower taxes mean you’re not giving as much of that rent to the tax-man. You need to calculate what would make more sense for you.
- Usable Space
Commercial space is typically rented by the square foot so generally speaking, the larger the space, the more you can charge for rent.
- Diversity
Having a property that is zoned for several different types of business can be a boost to its profitability. Much like your investment portfolio should be diverse to protect from risk, so too should your realty portfolio. Having many tenants means you can hedge against one of them going belly-up.
- Vacancies
Simple supply and demand is always at play when investing in property. If the area has a low vacancy rate, you can charge a higher rent. However, sometimes it’s good to purchase in an emerging neighborhood as there may be a greater chance of the overall value of the property increasing. Doing your research and investing wisely is the key.
- Infrastructure
It’s always good to invest in a property that needs little to no upgrades. Problems with the structure or the ventilation system can make that initial investment a lot larger so make sure the property is inspected properly.
- Utilities
A lot of usable space is great, but space that is expensive to heat or cool is not. Sure, these costs can be passed on to the tenant, but you could be cutting down on your potential tenant base if they deem the potential utility cost to be too high.
- Insurance
If you can, try to purchase a property that is at a lower risk for damage or destruction from natural disasters. Insurance costs can be sky-high at certain locations.
Owning a property can be a great way to increase yourcash-flow and be a great income source. When investing, just make sure you’re taking all factors into consideration to make it the most profitable it can be.