Investing in commercial real estate can be an excellent way to make money, but there can be downsides to it as well. Here we will look at how easy it is to actually take the leap, and help you decide whether or not it is the right move for you.
How Easy is it to Invest in Commercial Real Estate?
Whether you are looking in London or Bangkok, certain parts of investing in commercial real estate remain the same. Made up of any property that is used for income generating purposes, commercial real estate includes properties for office space, retail, and industrial use. Which you are interested in can alter how easy it will be. In Thailand, it is fairly easy to buy a series of condos to rent out, but there are different hoops to jump through if you are looking at other buildings.
The key is to know what it is you want to do, check that you are within the current laws and regulations and, in general, investing in commercial real estate should be completely possible, if not entirely easy.
What are the Pros?
Before you actually start to invest in a commercial building, it is important to look at the reasons why you should. There a number of positives to choosing this type of property, and here are a few key ones:
- Money – first, and most importantly, commercial properties have a higher potential for profits than residential. While this does of course change depending on the country, area, and many other factors, in general this is a great way to increase your cash.
- Very few expenses – again, compared to other property investments, commercial buildings tend to have very few fees and costs associated with them outside of the mortgage. The lessee is usually responsible for any expenses including many taxes.
- More flexibility with lease terms – one of the drawbacks of residential properties is that they have many laws and restrictions to protect tenants. Commercial properties don’t have the same level of rigidity and regulation.
What are the Cons?
There are a few downsides to investing in a commercial building as well, and you should take both into account before making your decision. Here are the main ones:
- Higher initial cost – the returns can be bigger, but your initial investment will often be greater with a commercial property.
- Time consuming – renting out any property can be time consuming, and the more tenants, the greater the drain on you. However, this does depend on the kind of real estate you invest in.
- More risk – there can be more risks involved in commercial real estate. More people around, different equipment, vehicles, and so many other factors at play can make it riskier than going with residential property.
Commercial real estate can set you back more in the short term, and it does require some effort and time; however, in the long run, it is likely to lead to greater rewards. Take your time, be thorough in your research, and think carefully about whether commercial real estate really is the right investment for you.