In investing and property circles, many commentators talk of the many benefits to being a commercial landlord. Commercial landlords rent out property to businesses, such as shops, offices and more. It is true that there are many benefits to becoming a commercial landlord.
For example, when compared to other types of real estate investment, it is a lot easier than other forms as there is less upkeep. It is a highly profitable, long-term investment and often is a great addition to a diversified investment portfolio. However, there are some downsides to being a commercial landlord – here is everything you need to know before you start investing.
Ongoing Costs
Although there are less costs within the property in terms of interior design and staging a home (like in private real estate) there are lots of ongoing costs when it comes to being a landlord for a commercial property. For example, general maintenance and repairs costs can be high, especially if you rent out a factory. You also may have to hire a property management company, depending on the type of commercial real estate you have. If you’re worried about your duties and responsibilities when it comes to upkeep, definitely consider asking for commercial landlord legal advice.
Long Term Investment
If you want to see an amazing return on investment and the value of your commercial property to rise, you may need to wait a long time before any of this is seen. Buying commercial real estate at a low price, and selling it for a much higher price takes a lot of time, money and effort. Anyone looking for a commercial property opportunity should definitely be realistic about their expectations, and know that this is a long-term investment for serious investors, and not for people who want to double their money within the year.
Market Volatility
Any type of investment will unfortunately be affected by market fluctuations, which in years like 2023, can be erratic and unpredictable. This can make the value of your investment dip and dive throughout time, before eventually climbing back up. You will need to be aware of the potential market volatility – commercial real estate is just like private real estate, and can be heavily affected by the market. You need to be paying close attention to potential market crashes that could create a void, and be looking closely for potential competitors within your area. This way, you will be able to better secure your investment’s future.
Tenants Have The Power
Once a tenant is in place, this usually means their business and whole workforce moves in as well. This can mean that it is quite difficult to get them out of the commercial property, if there is a problem at any time. Commercial evictions are a very long and lengthy process, and in that time, there could be damage to your commercial property. If your tenants are damaging the property and missing payments, this could affect you for a long time. It’s a good idea to be in close contact with landlord solicitors that can give you advice and help you with legal proceedings should this happen.
