Although investing in commercial property is risky compare to residential property, but commercial property do generate a significant profits from capital gains and rental income.
In today, we will share you the 4 useful ways of make money from commercial properties.
1. Initial capital gain
You have to make initial capital gain when you buy a commercial property at below market price.
2. Equity gain
Since the tenants help you to pay part (full) of your monthly loan instalment, the equity of commercial property itself will increase. The equity gain will becomes obvious over the time.
3. Capital gain
As you known the commercial property is for business uses, the rental and property price will increase in tandem with the profitability of business activities.
4. Cosmetic repair
In order to making money from commercial property, the maintenance work is absolutely essential. Be sure the electrical wires and plumbing are proper flow of electricity and water. Besides, doing cosmetic repairs such as painting and landscaping can also help to increase the value of your commercial property.
Many of property investors choose to invest in commercial property field is the rental yield is higher compare to residential property as well as longer leases. It is because a residential tenancy could turn over every 6 -12 months while a commercial tenancy could be between 3 and 10 years. In addition, the tenants also tend to stay longer when they have invested some capital customizing the premises.
Besides, nothing is perfect and commercial property cannot be an exception. The negativity of commercial property is quite sensitive to economy conditions which means when the economy is strong, the businesses flourish and the demand of commercial property will definitely go up. However, demand for commercial premises will falls when the economy is weak.
Hence, always up-to-date the economy conditions while investing in commercial property. Besides, there is a most steady way to make money from commercial property, is lease it out to long-term tenants as it can help to generate positive cash flow from rental yield.