With many property investors looking to commercial property as residential becomes less attractive, we look at whether buying commercial property is a good investment and hope to shed some light on it in this blog…
Refurb works with a lot of warehouse refurbishments and have seen many businesses set up with a mezzanine office and storage or retail unit below. This can be a great investment compared with joining the buy to let market, and here’s why…
Despite the initial investment usually being higher on a commercial property, the longer-term lease generally means you have the potential for greater returns. A residential lease for example can be 6-12 months and you’ll need to be prepared for more periods of vacant property, whereas if you rent out a warehouse for example, it could be on a ten year or more agreement.
The relationship between commercial landlord and tenant is strictly professional and there appears to be greater protection and support from the law in a difficult situation such as unpaid rent, whereas some residential landlords are moving away from the sector due to negative feelings about having to tackle these issues themselves.
When it comes to maintenance of the property, insurance and ongoing maintenance costs become the responsibility of the tenant or tenants, however you do still have specific landlord responsibilities too, for example as seen in our blog, ‘Commercial Landlords and Electrical Safety Responsibilities’.
What to look for in a commercial property investment
The main red flag we can warn you about is a poor EPC rating. This means there could be extensive refurbishment or renovation required to bring it up to a standard for occupation.
Ask to see the maintenance records so you can see what has been spent on the building and on what areas, how often inspections have taken place and what the outcomes were.
Then consider the future of your investment.
If you give the property an MOT style inspection yourself you should be able to see what might need addressing in the future. Look at electricals, insulation, smart lighting and heating and whether the property can be easily adaptable for the people it will contain – is it comfortable, attractive and practical enough?
Proper advice should be sought from a financial advisor before making any large investment, but we hope that these points have helped you make a decision you’re happy with. If you’d like to discuss your commercial property investment or ask for help with building maintenance or inspections, just give us a call, we’d be happy to help.
