Business

How To Choose The Best Commercial Real Estate As Investment

Many people think that it is hard to venture in commercial real estate investments but the truth is that it only takes a little effort to learn the rules when it comes to long-term investments. These commercial establishments can be a good source of passive income if chosen properly. You just have to invest in commercial fitouts in Canberra to attract renters while other properties come complete with fitouts.

Location is crucial if you want to get the most of your commercial real estate investment. The returns of commercial properties can be achieved in two ways, the rent you get and the capital appreciation of the property. These two will depend greatly on the location of commercial property. When planning to invest, look for properties in areas where the vacancy rate is lower than 5 per cent. The lower the vacancy rate, the lower the chance of tenants leaving and the demand is always on a high. With this, the rents are higher in properties within the area and it is expected that the initial capital will increase over time.

Look at the quality of the building you are renting. If your building is not as good as the quality of the one next to it, regardless of being on the same location, the building with higher quality will receive higher rent. Tenants coming from other countries are also more likely to rent a place with premium quality. Choose to invest in buildings with ratings between gold and platinum.

A good investor will check the rate of demand against the supply before investing. In each of the city, there are what they call micro-markets which always have a stock and pending supply. Brokers are also publishing the annual demands of every micro-market. The rent is more likely to decrease if the market has more supply than the demand. It will not only affect new buildings but the old ones as well.

Before buying, clarify with the developer if you are getting base rents or fitout rents. This is a common mistake in investors who are not expert in the field of commercial property buying. For instance, there are buildings rendered with commercial fitouts in Canberra, there is a possibility that the rent will drop after the fitout rents are no longer applicable.