Real estate is always an attractive avenue for keen investors. The prospects of property appreciation and their potential returns keep luring people every now and then.Investment in residential property in India is always on the boom. However, the commercial real estate investing trend is also witnessing a rise.
This is because commercial properties for medical care centres, hotels and shopping malls present bright investment opportunities. They provide huge returns on investment in short time. This is because of the high profits involved.
To avail this golden opportunity, here’s a beginner’s guide to buying commercial property in India. This is because commercial real estate investment can involve more calculated planning. Here are its possible benefits to the investor and how to go about doing it.
Commercial Real Estate Investing: Know The Benefits
1. Higher return on investment:
Generally, the commercial real estate market is a highly uncertain venture. However, higher risks are more often associated with even higher returns as well.
With some careful planning and right methods, commercial property investment returns can be truly rewarding. Most important, these returns would have a propensity to remain steady all through the market unlike others liable to instability.
2. Lesser market competition:
Because of the high risks and greater difficulties involved in these ventures, you’d find fewer investors. Buying commercial property is generally not everybody’s cup of tea. However, lesser competition also means that you get higher chances to tap the full potential of this booming sector.
3. Increased cash flow:
The lease duration granted to businesses for operating in commercial properties is generally longer than residential ones. Longer lease means greater cash flow too (provided the business’ profits are consistent). Commercial real estate investing in this case seems more viable and lucrative.
4. Triple Net (NNN) Lease:
Commercial investments provide for NNN lease facility wherein the owner only pays for the mortgage. Property tax, insurance and maintenance is the tenant’s liability.
How to Get Started with Investing in Commercial Properties?
1. Assess your options:
Does the investment fit into your pre-defined investment strategy? What are your financial requirements? Most important, are you willing to undertake the huge risk associated with the long-lease duration? Don’t forget to assess the expected cash flow from the investment. Besides that, be clear about your return expectations too – how soon or late you wish to seek returns.
2. Study the basics:
Commercial property investment can be slightly trickier than usual. However, with careful review of the market and gaining familiarity with its basics, you can score a point. Before you step into this project, ensure that you understand the key differences between Single-Net, Double-Net and Triple-Net Lease options.
3. Review property comparables:
These refer to the sale price of commercial properties(at the same location or of similar size and design) sold recently. A peek into these would help ascertain the market value of each property and facilitate your investment decision.
With careful and strategic planning, investing in a commercial property can actually be a highly profitable venture.
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