The basics of investing in commercial property are very similar to residential property investment. You rent out your investment property and receive rental income from the tenant (or 'lessee' as commercial tenants are known). But there are some important differences that you should be aware of.
Commercial properties have very different leases from residential properties. Negotiating the lease is a very important factor in your future profit of loss. For landlords this means maximising income from lease events and taking advantage of opportunities to enhance asset value. For tenants we seek to minimise outgoings and align lease commitments with corporate strategies.
Investment in a commercial property can provide secure log-term income streams and steady capital growth: it can help you diversify your investment portfolio from residential property, shares and bonds. Like all investments though, commercial property is not without its risks.
Typically, during recessionary periods commercial property is the first to suffer as consumer confidence has a significant impact on the asset class. The economy plays a large part in commercial property values and rents; if unemployment is high, the market is usually down. Fewer companies are hiring staff therefore unemployment levels are high, so consumers spend less money which then affects retail sales, which then has an impact on business income and businesses are less likely to be able to continue paying rent.
Commercial property is subject to zoning regulations, planning consent and use regulations. There are also building regulations to consider such as Wheel Chair Accessibility , Sound Insulation, Thermal Insulation, Fire Barriers and Doors, Emergency Lighting, Fire Alarm Systems, Fire Certificates, Security etc.
Higher vacancy rates mean higher risk for investors. The turnover of tenants using commercial property is generally slower due to the nature of the business itself, and the fact that capital growth in the commercial sector tend to be lower.
Prior to purchasing your Commercial Property it would be prudent to have the property inspected by a professional commercial building inspector. The Commercial Building Inspector in Toronto Ontario is a Certified Building Code Official who has a vast array of commercial and residential inspection experience.
Commercial properties have very different leases from residential properties. Negotiating the lease is a very important factor in your future profit of loss. For landlords this means maximising income from lease events and taking advantage of opportunities to enhance asset value. For tenants we seek to minimise outgoings and align lease commitments with corporate strategies.
Investment in a commercial property can provide secure log-term income streams and steady capital growth: it can help you diversify your investment portfolio from residential property, shares and bonds. Like all investments though, commercial property is not without its risks.
Typically, during recessionary periods commercial property is the first to suffer as consumer confidence has a significant impact on the asset class. The economy plays a large part in commercial property values and rents; if unemployment is high, the market is usually down. Fewer companies are hiring staff therefore unemployment levels are high, so consumers spend less money which then affects retail sales, which then has an impact on business income and businesses are less likely to be able to continue paying rent.
Commercial property is subject to zoning regulations, planning consent and use regulations. There are also building regulations to consider such as Wheel Chair Accessibility , Sound Insulation, Thermal Insulation, Fire Barriers and Doors, Emergency Lighting, Fire Alarm Systems, Fire Certificates, Security etc.
Higher vacancy rates mean higher risk for investors. The turnover of tenants using commercial property is generally slower due to the nature of the business itself, and the fact that capital growth in the commercial sector tend to be lower.
Prior to purchasing your Commercial Property it would be prudent to have the property inspected by a professional commercial building inspector. The Commercial Building Inspector in Toronto Ontario is a Certified Building Code Official who has a vast array of commercial and residential inspection experience.
About the Author:
Want to find out more about Wett Inspections in Barrie ON, then Barrie's WETT Inspector. Find a Wett Inspector in Barrie, Alliston, Orillia for all your wood burning appliance inspections.
No comments:
Post a Comment