8 tips for investing in your first commercial property

Investing in commercial property offers you the potential for great reward thanks to high returns, long-term leases (10 or more years) and tax breaks amongst other benefits.

However, those rewards come with an element of risk, purely down to the size of your investment.

So, if you’re entering the commercial market for the first time, how do you ensure you enjoy the rewards and mitigate the risk?

Well, that’s where ourselves at Platinum Property come into our own. We can help you focus on an investment that works for your goal, and then help through the process.

We’ve also provided eight initial considerations, which you can read below:

1. Determine your investment budget and return goals

Like any good business plan, you need to have a clear idea of how much you’re willing to invest to get the best return.

Commercial properties range from corner shops to large corporate edifices. So, figure out what’s the most affordable for you to start with, and what kind of ROI you can expect.

You don’t need to get too caught up in this just yet; it’s just so you can grasp the risk and reward factors along with other key factors such as location, building type, workforce skills in the area etc.

2. Understand the current state of the commercial property market

If you want to make an informed commercial property investment decision, it’s vital that you learn the various ins and outs of the current market. We can help you here, and you can also keep an eye on the latest trends, including new technologies changing the commercial property landscape.

3. Research, talk to experts and understand what you can bring.

You don’t have to figure out this process alone. Engaging experts such as ourselves, talking to professionals already in the market or reading up on all the mechanics of buying will help get you on the inside track.

You can also utilise your own talents and skills, like your experience of the residential market or playing the stock market. The general processes are largely the same, even if the finer details differ.

4. Learn the lingo

Terms such as gazundering, downval, or AIP can be a bit confusing when you first get into the market. However, we can help explain all the jargon, so you’ll be well versed in commercial property lingo.

5. Know what type of property is right for you and your business

Once your research is done, it’s time to focus in on what type of property you’re looking for and where. Location, location, location is key here, as are the types of businesses best suited for that location.

Be sure to consider any other factors like planning laws or building regulations. Take the time out to commission a property inspection.

Get all these considerations right before you dive in.

6. Set realistic objectives

Keep your goals in mind at all times. Figure out what you’re looking for and know how you can finance it. Then wait for the right property opportunity to come to you. Study the market and stay patient until you’ve found exactly what you’re looking for. The better the investment you make now, the more you can enjoy the rewards.

7. Sort out your financing

There are two options to consider when it comes to financing, leasing (including lease-to-own) or purchasing. In most cases, leasing is the more realistic option.

When finding the funding to do this, look to the usual suspects, such as banks, credit unions and mortgage companies, as well as other options like earn-outs.

8. Explore all possible ROI avenues

When compared to residential property investments, commercial properties give you more growth potential. In 2018 in Ireland, they had stabilised at just below 10%.

While the booming rental market can give further opportunities for growth, risks such as Brexit may also negatively impact those returns in the future. 

So, it’s important to keep on top of developments and regularly review your investment against your goals.

Here at Platinum Property, we’re always happy to help with any part of the property process. Click below to find out more