Once, commercial property investment was
reserved for those willing to pour larger sums into
their portfolio. Now, it is a much more open and accessible
market. Everything from car parks through self-storage
units up to hotels and business premises can now be
seen in a number of more modestly-budgeted portfolios.
property investments often target specific markets
where they will be able to reap the benefits of high
demand in both security and yield. They also often
benefit from reduced costs thanks to larger scales
of development. This combined with relatively low
levels of management are making commercial properties
into an increasingly popular investment with a wide
variety of investors. Many approach it with hopes
of an investment that offers a combination of high
yields and firm security. While commercial property
can indeed serve this purpose, it is important to
carry out a number of due diligence checks to ensure
that both areas are suitable catered for.
The best commercial property investments usually focus
on a particular niche sector which is undersupplied.
Ensuring that this is the case will be a critical
step in choosing a profitable investment that also
gives you security, as the resulting high demand is
a key factor.
is also important to give careful thought to the investment
conditions that commonly come with rental properties,
such as buy-back or guaranteed return periods. Where
long periods of guaranteed returns are involved, the
above point about making sure the investment targets
a good sector becomes even more essential. High guaranteed
incomes are rarely viable without sustained levels
of high demand.
is also useful to make sure you enter into the investment
with clear objectives and plan accordingly. In particular,
you may wish to plan an exit strategy and the length
of time you intend to keep hold of the investment
before executing that strategy. This will help you
ensure you have a clear plan throughout the life of
it is of course necessary to make due diligence checks
surrounding the developer, the development itself,
and any other firms involved in the purchase of the
investment opportunity. In particular, you should
ensure that the project is suitably backed by the
developer's assets, with little or ideally no debt
The sector being targeted is, once again, essential
in ensuring that your investment can obtain suitably
high yields. Developments targeting niche, undersupplied,
high-demand markets will bring in much better and
more consistent yields. The student
investment property market is growing in popularity
and is establishing itself as one of the safer property
investment options and is a great example of this.
the most profitable approach is to invest within a
unit that makes up part of a much larger development.
This means that you benefit from an economy of scale,
with much lower outlays because the production cost
was much lower than that of a self-contained unit.
This applies not only to purchase costs but to maintenance
and running costs as well.
properties at below market value can also be an effective
approach. This is usually done with off-plan
property investments, with the purchase price
financing the development costs. As well as lower
prices, you will get instant equity growth on completion.
However, be aware that purchasing off-plan can carry
some additional risks, and always carry out due diligence.