A commercial property investment promises a lucrative return on investment; however, if a decision is taken in a rush, such miscalculated steps may lead to a big loss. Investing in Real estate involves a careful and step-by-step procedure. A small mistake can lead to many legal hassles, impacting you in later stages of investment. The same is the case with commercial real estate investing. This market is very dynamic in nature and changes at an instant of time. Property price, rental, return on investment, and environment clearances are some of the major factors that must be considered beforehand.
Mistakes That Investor Can Avoid For Commercial Real Estate Investment
Scroll down to learn about the common mistakes which an investor can easily avoid to enjoy a fruitful commercial property investment:
A Thorough Property Survey
This is one of the common mistakes which a commercial property investor often makes. While taking a tour of the property, a broker shows you only the best part of it. This part will not have any loopholes, and hence you can easily fell into the broker’s trap and get ready to invest in commercial real estate India. However, it is imperative that you look at each and every part of the building, from examining the parking to lift, escalator, property conditions, and the fire safety system. You should also check storage rooms in case of a warehouse or industrial unit.
While gathering information about the property, you must check whether the property is constructed, keeping in mind the environmental norms or not. If it is an industrial property, then it should not be in the residential premises or whether the property is following all the locality norms or not. Check this beforehand as blocking money once will not be returned.
This is yet another prevalent mistake people commit during investment, whether commercial or residential. However, there are various types of hidden charges in commercial property investment that a seller or broker will not tell you in the earlier stages. The can be statutory and local taxes, or it can be in the form of repair, renovation, due insurance, or some other dues that the seller is responsible for paying but will ultimately come on your head. There could be continuing insurance, and the owner or seller may try to play smart and bill you for the same. Avoid these charges by doing proper commercial real estate research beforehand.
A Proforma Report is a document that a seller or a broker offers to investors giving details of the property’s future income generation capability. Avoid falling into this trap as all these reports are based on mere predictions and imaginary factors. It is advisable to be realistic in assessment, do proper research on the property ROI generation by yourself, or help a real estate expert considering the overall market scenario.
Information About Other Tenants
In case you are looking to buy a space in the building, spare some time to know about other tenants who have retail stores or shops in the complex. Please take a look at their earnings, sales on a monthly as well as annual basis. You must also check the lease duration of other stores for a longer or shorter period. If they are for a shorter period, you must not invest in such property as these spaces will get vacant, and you have to sit on a no man’s land place. It usually takes time to find a new tenant as a replacement for the outgoing one. Also, such investments are preferred as baseless.
Not Choosing The Right Real Estate Developer
A person who is a seasonal investor will know where to invest and what factors to keep in mind; however, who is investing for the first time would need a reliable developer to help them make the right commercial property investment. As today’s workspaces are more towards the creative and innovative side, it’s important to find a real estate developer in India capable of turning your design into reality and is reliable enough.
A Thorough Property Survey
This is one of the common mistakes which a commercial property
investor often does. While taking a tour of the property, a broker shows you
only the best part of it. This part will not have any loopholes and hence you
can easily fell in the broker’s trap and get ready to invest in the commercial
real estate. However, it is imperative that you must take a look at each
and every part of the building from examining the parking to lift, escalator,
property conditions and the fire safety system. You should also check storage
rooms in case of warehouse or industrial unit.