Why Commercial Real Estate is a Unique Investment
Commercial real estate offers more financial rewards even though all types of real property are good investments opportunities.
Corporates and SME's always require space to operate, thus, general profit for commercial properties lies more on the Capital gains or the rental income. From malls, hotels, warehouses, office buildings, medical centers a commercial property can carry a number of units used solely for commercial purposes.
- Professional relationship
Commercial property is used for business purposes, its tenants are businessmen thus the relationship between the landlord and tenant is kept professional and interactions are courteous. Business owners in most cases take pride in their investments and are always in protection of their livelihood sources. Corporates come from a pool of investors making all of your relationships with your tenants more of a business-to-business.
- Flexible lease terms
Unlike residential properties, commercial properties come with fee consumer protection laws governing the leases. Laws such as security deposits and terminal rules do not apply for a commercial property unit making leasing a unit more flexible than leasing a residential unit.
- Price evaluation
It's easier to evaluate a commercial property price being since it's more based on the current owners' income statement than a residential property that most cases come with a fixed-rate payment. In cases where the business relies on a knowledgeable broker the asking price for the commercial property should be ranged at a price where the investor can earn the prevailing cap rate. This is way too much easier rather than emotional pricing as it is in residential leasing.
- Potential income
It's one of the best reasons to invest in a commercial property rather than residential property for its high-income potential. Depending on the area location, current economy or any other external factors like a pandemic, commercial properties typically have an annual return of the purchase price ranging from a 6% to 12%. This is high, compared to an ordinary single-family resident of up to 4% annual return at its best.
- Operational hours
It works when they work, business goes home at night most of them giving you the ability to operate within their working durations. Nights to an emergency midnight calls of lost keys and brokerages don't come with commercial properties. Maybe one-time alarm monitoring for break-ins or fire alarms is the only common burden you'll bear on your shoulders which got the solution. With the alarm monitoring services, in case of anything you are able to get notified by the alarm service company can bring you peaceful nights, unlike a residential property landlord.
If you have a real estate press release or any other information that you would like featured on African Real Estate Blog Post do reach out to us via email at [email protected]