Commercial property is a popular asset to own as the returns on your investment tend to be greater than those in other asset classes.
Broadly speaking, there are five different types of commercial investment, so how do you know which one is right for your money?
Retail
Retail is a great investment – think shops or even shopping malls. Retailers pay big bucks for prime locations which is great for your bottom line. The bigger the retailer, the less likely they are to go bust or need to move out of the location too, which will give you a steady return. However, if they do go bust, they are more likely to do so owing more money to more people than smaller outlets would.
Hospitality
Hospitality can be a good place for investment as renters will always be available. In hospitality, if one outlet closes, there will usually be another one to take its place quickly. That way, the new renter can capitalize on the fact that potential customers already know that there is a bar or restaurant in this location. These outlets are required to adhere to health and safety standards by law so you know your commercial premises will be well looked after.
Office
Most companies need office blocks to work from and, once they are settled, they are unlikely to move for a long time, giving you a solid investment return. A company that has enough employees to occupy this much space is usually quite financially solvent too, so you are taking a smaller risk than you might be with other commercial investments. However, it is always best to use due diligence on the company before you let them sign a rental contract, just to make certain.
Industrial
An industrial investment will cost you a lot of money to start with as they usually need a large amount of space. However, once you are set up, you have a stable tenant as larger-scale industrial units are harder to come by, giving potential tenants less choice. This lack of competition means that your returns could be greater too.
Multi-Family
A multi-family commercial property is one that is rented out to more than one company at a time with each business occupying a share of the property rather than the whole thing. This can take a little organizing and more work on your part, but Extrance’s platform makes use of blockchain technology to take commercial real estate investing to the next level, making it easier for you to invest. This can be a good way to hedge your bets as you have rent coming in from three sources at a time rather than just one. If a company moves out, you have only lost a third of your total rent rather than all of it.
These are the five main types of commercial properties you can invest in. They should all give you great returns and be a fantastic place to put your funds and watch them grow.
