When investing in Commercial Real Estate it is vital to have as many options as possible; and then decide upon the most advantageous one - which will provide you with the best return.
After many years, it has been proven that the following twelve criteria are what most of your Commercial Property investment decisions will rest upon.
Because there are 12 criteria in all, this segment is being split intoseveral parts. In any event, it willexplore the various Criteria you need to consider before deciding upon the most appropriate Commercial Real Estate for your portfolio.
will cover the following aspects, when choosing your property:
Tenant Calibre and Lease Period
- Tenant Calibre
- Lease Period
- Recent Construction
- Flexible Design
- Lease Structure
- Absence of Competition
Clearly by having a solid corporate tenant or government instrumentality, with a minimum 5-year lease period ... these are two of the key items for a successful investment and ensuring a strong overall return for your property. But sometimes you need to settle for smaller private tenants; so just make sure you check out their pedigree and past performance.
Recent Construction and Flexible Design
Having a brand-new building will mean far less maintenance and running expenses for your property; and also avoid the need to embark upon any unexpected upgrade work. Plus, this provides you with generous depreciation tax benefits as well, as soon as you own the property.
By having a flexible layout, it means that when tenants do vacate after the initial lease expires... the overall layout will be attractive to a variety of potential tenants.
Lease structure and Absence of Competition
Your lease structure relates to issues such as the type and timing of your rent reviews; plus who pays the outgoings. And also, to what degree a tenant is responsible for maintenance. Understand, this is not a complete list - simply by way of some examples.
When it comes to absence of competition: this relates to the number of similar properties located within the nearby area. If there are a lot, then this may have an adverse impact upon your buying decision - as it may become hard to release the property when a tenant leaves down the track. Whereas a lack of competing properties, generally means good rent growth and a constant supply of tenants.
will be following shortly; and it will contain some more helpful tips in choosing your most appropriate Commercial Property investment.