Buying commercial property can be an excellent investment decision. These properties can generate a considerable amount of profit from rental income or from capital gains, when they are resold at a higher price. Before you buy, it is essential to get a full analysis of a commercial property to ensure that it will be a smart investment move. The analysis should include the following aspects:
– Location Location is everything when it comes to real estate, whether it is residential or commercial. A commercial property is designed to make money and where it is located has a huge impact on the profitability of the purchase. Your land will be more valuable if it is in a high traffic area, especially a high foot traffic area. This is because more people (potential customers) will be continually getting exposure to your building and its offices or businesses. It also means that it is easy to get employees and tenants, probably by car as well as by public transportation. Your building will also be worth more, if there are few similar style and purpose buildings available in the surrounding area. This makes it a scarce commodity.
– Rentable Capacity Part of making money on your commercial property is getting businesses or retailers to occupy the space. Your analysis should include a conclusion about the capacity of the facility to be rented out. That means to check whether it is in good, usable condition, or whether repairs and renovations need to take place before renters will be attracted to the property.
Under this category, you should also determine just how much your property should be able to earn in rental income. Buildings that have potential for higher rents are obviously going to be worth more than those with lower rents. You can find out the average rental income by comparing the rents of similar buildings in your area.
– Tax Breaks An analysis of your commercial property should inform you of the possible tax breaks associated with it. Most commercial land owners are entitled to tax deductions for their mortgage loan interest as well as the property taxes and for the costs incurred to maintain the facility.
– City Development Plans Location is the key to buying a profitable commercial property, but a good location can quickly turn into a poor one if the city’s development plans push businesses and retailers to new locations. When you conduct an analysis of the property site, you should obtain a copy of the city’s plans for business zoning and growth for the next decade, if available. This will give you a good idea about the feasibility of the location in the long run.
– Appreciation Rates Similarly, commercial properties are worth more if they are in high growth areas or very stable areas of a town. This usually leads to healthy rates of appreciation for trade building prices. If you are interested in buying a commercial land for future capital gains, in addition to paying attention to all the above details, finding a building in an area where appreciation rates are rising consistently is very important.