If you’re new to the commercial property sector, it can be easy to get lost in the seemingly endless stream of conflicting information, enough so that it might deter you from an investment.
We’d like to bust some of the most common myths that have somehow gotten tied to commercial property investment.
Myth: It’s too much of a risk
No matter where you’re placing your money, there’s always going to be a level of risk. The recent pressures of lockdown restrictions have only added an extra layer of complexity.
However, the best way to avoid significant risk is to research and plan.
Certain commercial sectors have been impacted due to lockdown restrictions, hospitality especially. Despite this, the pandemic has also opened up new opportunities for commercial property investment.
Industrial spaces are in demand by e-commerce businesses. Issues with supply chains mean these businesses are ordering and storing more stock than usual and require more and even bigger spaces.
Premium office spaces and even retail are also experiencing steady demand due to pandemic changes.
The key is to pay attention to the market and what new stock is coming.
Myth: It’s just like residential
If you’re new to the commercial property world, chances are you’ve dipped your toes in residential property. Regardless of how much residential property experience you have, it will only provide limited expertise.
Commercial property comes with an entirely different rule book, including:
– Different market trends
– Lease agreements are much longer
– Many outgoing costs can be allocated to the tenant
– Better cash flow for landlords
Myth: It’s too complicated to manage
While we think the benefits of commercial property investment outweigh residential, there are a few additional elements to understand.
These include understanding the type of insurance you need, having an up to date Building Warrant of Fitness (BWOF), organising maintenance contracts, sourcing suitable tenants, and have up to date valuations.
A commercial property manager will cover all these areas, ensuring your investment is looked after. In most cases management fees can be recovered from your tenant where the lease permits.
Myth: You need a lot of money
One of the biggest myths about commercial property is that investors are fat cats with deep pockets.
Like most things, commercial property investment values come in at different levels. While it’s certainly true that there are properties valued at sizable amounts, that isn’t the case for every property.
Start with an investment you’re comfortable with at first. From there, you can build your portfolio. Always keep in that commercial property is the epitome of the long game. The hardest part is getting started.
Myth: Returns are immediate
When it comes to owning a commercial property, it’s important to maintain your expectations as it’s likely that you won’t see returns overnight.
While commercial property is a profitable investment, it’s also a long-term commitment. First-time investors need to get established in the market first and grow their portfolios in order to see high returns.
At Azure Property, we have decades of experience in commercial property management.
After years in the industry, we have a robust understanding of the market and all the other complexities tied in with commercial property.
Get in touch with us to see how we can help.