On one hand, where commercial properties are far more expensive than residential properties and cost considerably more to maintain. On the other, they can also yield higher returns on investment than residential properties that are rented out or sold. As is the case with many fields of investing, the rewards are proportional to the size of the risks taken.
Let’s take a deeper look at the pros and cons of owning a commercial property.
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Sr. No. |
Benefits of owning a commercial property |
Drawbacks of owning a commercial property |
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1 |
Higher Rent Owners of commercial properties command higher rental income. Because commercial properties are a source of income for the tenant, it occupies usually a larger space in more central locations and often consists of more extensive services and resources. |
Economically Vulnerable Businesses are more volatile than residences and can stop paying rent if the economy slumps. In this case, owners should start searching for a new tenant for continued returns. |
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2 |
Value appreciation It’s a common practice to rent out the commercial property to cover the operating cost and make real money from the increase in the value of the property. |
Time commitment Commercial properties will demand your time and energy. With commercial, you are likely to deal with multiple leases, annual maintenance, tax issues, public safety concerns and more. |
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3 |
B2B Relationship The landlord and the tenant have more of a business-to-business relationship. Regular interactions are professional and courteous. Usually, both parties try to strike a long term deal which is a win-win for them. |
Professional help required It’s an altogether a different ball game when it comes to leasing administration, maintenance, taxes and paperwork for a commercial property. You will need to take the help of an agency or managing company to handle these concerns. |
Commercial or residential properties are good investment options. For your money, commercial properties typically offer more financial rewards than residential properties but are also associated with more risks.
Understand the commercial landscape of the city, have complete knowledge of the real estate developer and most importantly be thorough with the paperwork before you make the investment decision that’s right for you.
Know more about how to buy a commercial property in Pune here.
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