Property Investment: How beneficial is it to invest in commercial property, know the profit and loss before buying

HR Mandi Bhav News, (New Delhi). But there are some people whose first choice is real estate. Now if we talk about investing in real estate, here too there are two ways. First is residential property and second is commercial property. There is a debate on which of these two is better. Let us know about it in detail.

You must have read and heard a lot about residential property, but most people have less knowledge about commercial property. 

Commercial property includes shops, showrooms etc. Today we are going to tell you some important things related to investing in commercial property. After reading this you will know what are the advantages and disadvantages of investing in commercial property.

Salary earners can also buy commercial property

There is a belief that only those who have a lot of money can buy commercial property. This is true to some extent, but not completely. 

These days, salaried people have also been seen investing in commercial properties. Commercial property has the potential to provide consistent returns to the investor. 

Apart from this, the rent is also high and a passive income can be made, but it may also face some problems. So let us first talk about its benefits-

excess rental income

The biggest advantage is that rents are higher in commercial properties as compared to residential properties. Generally it is said that residential property gives annual returns of 1-2 percent, whereas commercial property is capable of giving returns of up to 8-11 percent annually. 

However, area also affects commercial properties. So if you only want to generate rental income then investing in commercial property is appropriate.

No furnishing costs

Another advantage of commercial property is that there is no need to furnish it before giving it on rent. In such a situation, the property owner's expenses are saved. As a commercial property owner, you can rent out your tenant without furnishing it.

Less conflict with tenants

People who rent shops or showrooms are associated with companies. They are not common tenants. Their money management is better than ordinary tenants. 

Rent for 6 months or a year remains in advance. Renting firms take rent for a long period of time (5-10 years). If a big bank takes a part of your property on rent, then the value of the other vacant part of the property increases further.

big investment

This cannot be called a disadvantage, but it is definitely a limitation. A huge investment is required in the beginning, whereas in residential property the initial investment is much less.

expensive loan

The second limitation of taking commercial property is that you have to pay higher interest rates to take a loan on it. Commercial property loans are generally expensive. Loan rates sometimes depend on the type of property, investor profile, location and repayment period.

Difficulty in asset management

While it is quite easy to find tenants for residential properties, it is equally difficult to find tenants for commercial properties. Since commercial properties are owned by large corporate houses and non-individuals who want the convenience of end-to-end asset management, you need professionals.

A lot of research is needed

Any investor needs to do a lot of research before buying a commercial property. The investor has to understand the costs associated with the property, taxes applicable on it, regional laws and rent-out laws etc. 

Along with this, research is also required to get good information about the market and location. If there is even a slight mistake in the calculations, the investor may face big problems.