9 Reasons why Investing in Commercial Property is a good idea
Investing in real estate is a great way to earn a steady income. While residential and commercial properties have their advantages, deciding between the two requires careful research. And the decision becomes even more difficult if you are new to real estate investing.
For a long time, people have had the idea that commercial properties include shops only. However, the term has a wider meaning to it. Freehold office spaces, warehouses, industrial buildings- a commercial property encompasses them all.
On top of that, people believe investing in the commercial sector is for larger businesses, but that could not be far from the truth. Any individual or entity can buy commercial property Mohali. Let’s get a better understanding of what a commercial property entails.
Types of Commercial Property
Office space
One of the most influential types of commercial real estate with multiple tenants is a freehold office space. These can be SOHOs as well as flexible co-working spaces. The location and property style of an office space is the most important factors when looking for tenants; which is not as difficult of a task.
Industrial property
What makes industrial property appealing for investors is its low entry cost. An industrial property is meant for businesses carrying out manufacturing activities. Warehouse and storage areas are part of industrial properties.
Investing in a commercial property has quite a lot of advantages. Let us go through the advantages of owning a commercial property in Mohali to see how it can add value to your life and what to expect from it.
- Regular cash distribution
When it comes to rental incomes, commercial property in Mohali can generate a greater return on investment. With an estimated yield of about 8-10%, you get sizable financial gains in the commercial real estate market.
These returns can go even higher depending on the condition, location, and services of your property. If your only goal from the investment is to earn a regular rental income, a commercial option is your best bet.
- Longer lease contracts
One of the attractive features of commercial properties is that lease agreements last comparatively longer. Residential properties, which, as already mentioned, offer investors impressive returns and significant monthly cash flow, typically have shorter lease agreements with tenants than commercial buildings. Commercial property leases are frequently signed for a number of years.
- Capital appreciation
Even more important than cash flow is the potential for creating enormous wealth through capital growth. Commercial real estate frequently experiences a significant increase in value over time. In fact, among all investment types, this one proves to be one of the best hedges against inflation.
One of the causative factors is that commercial real estate’s value is based on rents, which rise in line with inflation. It’s straightforward: if the rents double, the value of the property also doubles. Because of rising construction costs due to inflation, the value of existing properties also rises.
- Professional business connections
In the commercial real estate realm, investors have a significant chance to engage in business-to-business interactions. When looked at from a professional perspective, this results in better interactions with your tenants. You might even be able to develop relationships with the business owners, thus making your circle larger. It’s always a great opportunity when you get to enhance your network. This makes investing in commercial property an intelligent choice.
- Convenient to deal with tenants
Tenants generally encounter a few problems and need help with rented spaces here and there. Most businesses wind up for the day at night, so no phone calls at midnight troubling you with the maintenance requests. You get to sleep peacefully at night. Additionally, if there’s ever any fire alarm trigger or anything else going wrong, the alarm company will notify the appropriate authority.
- Secure mode of investment
Commercial properties come with strong intrinsic values. They qualify as hard assets since both the land and the building have their own individual value. Even when they are not occupied, investors are protected from cash flow loss by purchasing commercial real estate in the ideal location.
- Reduced Competition
Another advantage associated with commercial real estate is that there is relatively little competition. Due to the difficulty of business investments, they are usually less crowded among other investors. With such low competition, you can benefit from your investment without any hitches.
- No furnishing costs
Commercial properties are good investments because they don’t require you to spend money on furnishing them. Based on the tenant’s business needs, they will renovate the office spaces accordingly. You won’t have to pay anything once the tenant has taken the space on rent.
- Liberty to start your business
While you may be employed today, there comes a point when you think of, or rather have to, retiring. In any case, you’ll have to find ways to earn some primary income.
When you think about it, commercial property offers you the freedom to start your business at any time.
Conclusion
In addition to providing a stable source of income, commercial real estate offers the opportunity for capital appreciation as long as the property is well-maintained and updated.
Thus, investing in commercial real estate can be a great way to have financial security. With regular rental options, a commercial property experiences an overall increase in value over time.
