If you have ever experienced being a land lord of a house; more than the rent collection, you must be having the memories of complaints by the tenants at odd times. Many times the landlords would have disturbed your peaceful meals and sleep. So, when we look at many rich people in the world, we come to conclude that they invested their mind and money a lot in making the commercial real estate property. One of such examples is Donald Trump who spent years in making the office spaces and he made huge money out of that later.
So, one always has an option to choose between the private real estate investment and commercial real estate investment and we have come up with the clear choice which is, investment in the commercial real estate properties.
So let’s have a look, why?
Commercial Property Gives You Bigger ReturnsThe commercial properties are taken by the business men who first see the location of the shop, office etc and after getting convinced with locality and the possibility of the property of giving more returns, they come to you. They already know that the shop is at prime location and they also know about money making possibility in that area. So, when the person approaches you, really wants that property from you as that is a precious option for the person. In this case, you have a fair chance of negotiating and starting with a good rent.
Usually the commercial property rent is always higher than the residential property. So once you spend in a commercial property, you are definitely going to get more returns than the returns from residential property.
Commercial Property Is Treated More Carefully Than Residential PropertyThe reason of why you should go for the commercial property is the tenants are more careful with the property. They are going to use it for the business purpose; so many of them work on to renovate it and in order to do so they make many improvements in the property which enhances the property value for the next deal.
When it comes to small repairs they prefer to do it themselves as they have to get the repair done fast as they need to run their business in it. That is why they cannot afford to waste the time spent in the landlords’ response.
For example: if it is going to be an office, they may make partitions in that space to make it look like an office. This kind of setup can be useful for any firm.
People also build an internal cable network in the space which can be used for anyone who needs the internet connection in all over the area.
All these things always improve the value of the property and it becomes more commercial looking property after being used by a professional group and it gains the possibility of getting the bigger clients next time.
They quickly work on fixing the defects themselves without disturbing the landlord as they also do not want you to visit their frequently but in the residential properties the tenets use the house with least care. They make many defects in the property like puncturing the walls and making many personalized changes about which you get to know only when you have it vacated. The new tenants also demand many changes or repairs at the time of getting in to the house and sometimes it proves to be very costly to the landlord.
Rental PaymentsNow another issue is the rent collection. People, who have the residential property, know that with few tenants how difficult it becomes to get the rent on time. If the tenant has the tendency of not paying the rent, there is a possibility of you losing money for many months and when you get to understand properly and conclude to get it vacated, it becomes too late. You have already lost a lot of rent till then. It’s also difficult to make that rent collection call to the tenant as they have their unavoidable reasons which are more important than the rent. Hence the landlords are always hesitant in getting straight forward in collecting the rent. It’s possible that the tenants may run away overnight from your house as they may not have much to lose there but in such case, you can lose the rent of many months. There are many examples like this.
In contrast, the commercial property user has a lot to lose if he suddenly decides to leave the property. They establish costly goodwill the property and they cannot suddenly stop using it. They also earn the people traffic to the shop, restaurant etc and they cannot suddenly vacate it otherwise they will lose the business. They also will lose their goodwill in the business world and they do not want to earn a bad name by anyone as sometimes the goodwill is more precious than the money. Good business people always prefer to pay the rent on time as these are their regular expenses and they do not want to waste a single minute on the rental dispute kind of issues. If the property is big, then the business may have a designated person to do this job on regular basis. Hence rent is regular and hassle free if you own a commercial real estate property. They keep people well informed about vacating it so that they do not lose their customers or visitors. If it is a firm, they will take time to make a new set up somewhere else and make necessary arrangement for the employees, hence the chances of leaving the property overnight and run away like a residential property tenant, is next to impossible for a commercial real estate property tenant.
So if you are planning to invest in a real estate property, please think of all this and decide. We wish good luck for you investments.