Pros and Cons of Commercial Property Investment
Investing in commercial property comes with both benefits and drawbacks. However, the knowledgeable investor can weigh both the good and bad and invest with tact, but it takes a degree of knowhow in perfecting that balance.
By anticipating both the pros and cons of investing in commercial property, those taking the plunge can be prepared for anything. Consequently, here’s a quick rundown of the pros and cons of commercial property investment.
Con: Greater Risks
A residential property will have the same users, who are accustomed to the environment and how everything works. Their guests will be respectful not to make a mess and are unlikely to use the utilities in a property that’s not theirs. Consequently, everything is used respectfully by those who know how to use it, meaning there’s less chance for breakages and accidents.
Commercial property is much different. Customers can roam freely and touch anything they please and are also less likely to be courteous in their movements. For example, they can tread in mud, leave toilets utterly filthy and cause any other number of issues as they roam about the commercial property mostly unchecked. These risks can require more maintenance time spent at the property, and thus higher costs.
Pro: Loyal Support
Investing in residential property can be burdened by a great deal of slack. The parties involved are smaller and are in most instances typically between one landlord and one resident. Consequently, any disputes can sometimes be brushed aside by the letting agency, or even caused by them in some circumstances.
Nevertheless, when it comes to commercial property, the support is endless. Business reputations are on the line, as are livelihoods. What’s more, business owners aren’t scrappy students or naïve first-time letters; they’re professionals. The decent companies respect this. For example, GVA real estate don’t slack on support, and maintain contact throughout the entire property lifecycle. Consequently, there’s more loyal support to be found in investing in commercial property.
Con: A Longer Waiting Period
Delays are not uncommon in the gap period in-between tenants, and empty periods can feel like they’re lasting a lifetime. Of course, these delays can affect the money that’s coming in too. In the end, it’s far harder to set up a new business in commercial property than it is to move into a domestic one.
There’s a lot more to consider for those renting out a commercial property, and many viewings will take place over the span of months or even years. For example, businesses may have to make sure all their existing employees can move on a certain date, and thus allocate the ‘move in’ time to a period that’s many months away. Additionally, they must transport assets to a new area, hiring a fleet of trucks to get the job done, among other things. Ultimately, there’s far more logistics involved, and it will affect the investors returns.
Pro: Strictly Business
Business relationships get straight to the point. They are focused, disciplined and strive toward a mutual benefit for those on either side of the deal. This means that, unlike with investing in residential property, investors can have more confidence moving forward in the commercial arena. Put simply, there’s no nonsense.
Additionally, commercial property is only active during business hours. Therefore, there’s no anxieties about the phone ringing in the middle of the night or angry residents barraging you with unchecked rage. Ultimately, investors can expect to deal with a business acumen and a respectful decorum that works toward problem solving together.