There are several things to take into account when deciding which commercial property to buy. While the location and purchase price are common considerations, it is wise to look into several other aspects of the property and its surroundings.
Advisor to commercial property investors, Chris Lang outlines eight ways to avoid failing as a commercial property owner. Without extensive research of the area surrounding the commercial property as well as a thorough analysis of how tenantable and risky the investment, an investor may find it difficult to benefit from the purchase. Lang discourages over-borrowing and over-estimating skills necessary to manage the commercial property. In most situations a commercial investment requires a hands-on commitment to ensure the property is meeting its potential. Every commercial investor needs to educate themselves on the property market and process of renting commercial buildings.
A cheap investment property is not always necessarily a good one. A property with good value will continue producing benefits for the investor for the long term. Finally, Lang recommends diversifying commercial investments across geographic areas as well as different sectors of commercial property.
Tax wise, when investing in commercial property, is it important to take into account the property’s age, yield percentage, lease length and future building maintenance as they will all affect the tax depreciation deductions available to the investor. Consult a qualified Quantity Surveyor to answer any questions about commercial property depreciation.