When you start your search for a commercial property to invest in there are basic factors that you should take into account.
Like residential property, location is one of the most important things to decide on. The location of a property can mean the difference to having trouble free ongoing income or not. Of course location is not the only factor to look at, below is a list of factors that I take into consideration.
This is still the No. 1 issue. You want to be close to customers, of course, this depends on the type of investment you are thinking of, for example lets say that you are looking at an investment with a café in it. It’s obvious that it’s going to be best if it’s in a position where there’s passing customers all day. If you are choosing an industrial investment it may be best to be located in an area that relates to industry.
Once you have chosen a location, you can check out the physical condition of the building i.e. are there environmental issues or potential liability issues, such as asbestos, major repairs etc.
It’s important to check with the local authorities what uses the building can be used for. If there is any restriction at all you need to know about it now. It will be best if designing is flexible so that you may consider other parts of tenants down the track.
Limitations on exterior and interior.
Whether due to zoning laws or building codes or covenants, there may be limits to changes or alterations you can make to the property. A good example is a building that is in an historic area and subject to restrictions on changes that can be made to the façade. Also the layout of the building is very important for future possible change of use.
Adequacy of access and parking.
It’s great to have parking on site, if you looking at 2 properties in one has parking in one doesn’t , I would prefer to buy the one with parking. We can be creative here though by using car stackers or even a turntable. If there is a lot of parking you may be to rent that out to separate tenants.
Opportunity for expansion.
Always look at the property to see if there’s any opportunity for expanding the building to increase the lettable area Often dividing building up into small spaces can result in more rental income.
Due Diligence and Evaluate the Property
By this stage you are well down the path in choosing a property to invest in. But now you must complete due diligence on the investment.
By using individual advisors such as a building inspector, lawyer, accountant and planner, you will be able to check on the final points before proceeding with the purchase.
Commercial property investment is not as emotional as residential property investment and by using your team of advisers you should be to stand back and have a very hard look at how the investment will perform for you prior to making a decision.