The vitality of commercial real estate appears as an option not to neglect to face a residential real estate often perceived as less risky but not always more advantageous. Builder party wall surveyors local
A secure investment
Less known to the general public, investment in commercial premises offers you financial and mental stability :
Financial stability because the commercial space is a source of turnover for the occupant whereas, for the tenant of a house, it is above all a cost. The payment of rents is, therefore, more assured with a commercial tenant because it derives benefits from the local user.
Rental stability because the rotation of tenants is less with a commercial space, the latter having a particular importance for the sign that is implanted there. Indeed, the trader is often attached to his location because of the presence of his clientele. For you, having long-term tenants is an advantage, it significantly reduces the costs of managing the property and you lose less time in this management.
Thanks to the commercial real estate, you avoid the hazards of rental housing management. The latter is often constrained to problems of unpaid rent and/or turnover of tenants. Fewer constraints, but also interesting financial benefits.
Better performance and more flexibility than in housing real estate
Up to twice as profitable, commercial real estate can offer a profitability ranging from 5 to 7% against only 2 to 4% in rental housing real estate.
The flexibility of the commercial lease is more important and the remedies are facilitated in case of unpaid rent. These are already much less common than in housing real estate.
With regard to the commercial lease, you can freely define certain conditions and discharge certain expenses, particularly in the area of heavy work and property taxes.
In order to benefit from the advantages of this type of investment and if you wish to make the choice to invest in your own walls, you will have to pay attention to the specificities of the investment in the commercial real estate.
I take advantage
The specifics of investment in commercial real estate
Location: a priority for a good investment
Investment in the commercial real estate is specific. Prices are not calculated in the same way as for housing, the expectations are not the same depending on the business sector of the trade. The location and the chosen city will, therefore, have importance on the amount of your investment.
The most favorable locations are located on the main shopping streets, squares … The commercial premises exposed on the sunniest side of the street will sell more expensive, but will also offer better performance and higher demand.
If your location is searched by traders, you will also more easily re-sell the property and the added value to the resale is likely to be significant. The only drawback is that profitability can be lower for the simple reason that the risk is lower, the return is lower. This rule applies to any investment: profitability pays for the risk.
The choice of the location of your investment will be crucial. The more it will be prized (often located on major arteries, close to transport, frequented …), the more it will offer you a security just as it will offer one to the tenant. Its turnover being favorably ensured by an optimal location, your rent too.
Buy empty or busy
Investing in a busy Property offers you the advantage of knowing the rent and therefore the rental yield. In investing in a busy locale you avoid the hassle of a tenant’s search management.
In addition, if the merchant is already present and his business generates a suitable turnover, it confirms the qualities of the location. Finally, if his business is good, you have less trouble to make you about the payment of your rent.
On the contrary, if you decide to buy empty, you will have to check that the projected rent is in line with the market values commonly used for premises with similar characteristics.
The establishment of the commercial lease
Commercial leases obey specific rules. First, the lease is signed for 9 years, which ensures the presence of a tenant for a long time. The tenant may decide to terminate the tenancy at the end of each triennium.
If the commercial investment is a vector of security, it is, therefore, thanks to the commercial lease. The tenant of business premises has every interest in paying his due since he owns a business, the lease of which is an integral part. If it fails, the fund, so the capital of the trader, sees its value decline.
In the event of a payment problem, a commercial lease is governed by company law and the commercial lease allows the lessor to recover his premises by court order quickly and without the constraints that can be had in the context of a rental agreement. ‘nude house’ classic ‘.
As we have seen, a commercial lease is also more flexible. It allows you to freely define its conditions and to specify which signatory party will be responsible for expenses (interview fees, property taxes, major works, etc.). Proof of the great contractual freedom of this type of lease.