How to invest in commercial property
Whilst many of the people who invest in property will invest in residential properties, some choose a different route for their investment. This includes commercial properties.
Investing in a commercial property is somewhat different to investing in a residential property and there are different things that you need to consider and think about before you dive straight in.
If you are thinking about investing in commercial property, here are some of the main things that you need to consider and keep in mind before you jump in and make a decision that can impact your future.
How to invest in commercial property?
There are three main avenues that you can take if you are looking to invest in commercial property. The first is direct investment; this is when you buy either an entire property on your own, or you own a share in a property with other people.
You can also invest in a commercial property with a direct commercial property fund. This could be with a unit trust or an investment trust. They can also be known as brick-and-mortar funds; the investment company owns the building, and you invest via them rather than owning the building yourself.
Finally, you can choose to invest via indirect commercial property funds, these are indirect investment schemes that are collective, and the investors will invest in the shares of the company that is listed on the stock market, rather than directly in the property. This is a much more flexible approach to investing in commercial property. More often than not you won’t have as much money to invest and it can help you to learn more about how to build a commercial portfolio, with a variety of properties.
Why it is worthwhile investing in commercial property
Now you know more about how to invest in commercial property, you may be asking yourself whether or not it is worthwhile doing. The idea of investing in commercial property is that it helps to provide you with some form of financial security and stability for yourself and anyone else who may depend on you.
It can be seen as an asset, as it can help you to rent out a property that is not quite as related to property markets and the economy as residential properties.
Another thing to keep in mind is that commercial properties are often longer term than those that are residential, and the general tenancy agreement can be as long as 15 years, whilst the average is usually around 8 years. This is a direct comparison to residential properties, which can be as short as 6 months.
The great thing to know about investing in commercial properties is that you can do this either directly or indirectly. It is down to you and what you are looking to achieve with your investment.
Direct investment means that you either own the property on your own or with other people. You can also invest in property indirectly, which will help you to feel the benefit of this investment, without having to tackle the direct running of it. Ideal if you find that you don’t have the time to spare, but you still want to invest your money.
It is important to remember that you need to take your time to think about which commercial property investment is going to work for you. When you carefully consider what is going to be right for you, then you can be sure that over time you will have an investment that is going to help you with the future and your financial stability.
Also Read: Why Property Investing?