Getting onto the ladder as a commercial landlord might be daunting but, if you’re feeling ambitious and ready for a new business venture, this one could be extremely lucrative.
With the industrial real estate sector predicted to grow by 3.4% per year, it’s time to take a look at the commercial properties for sale in your area. Read our handy guide below to find out what you need to know before getting started as a commercial landlord.
What are the benefits?
- A steady, long-term income
Companies always need offices and physical facilities. If you buy a modern, convenient space in a competitive location, you can be confident that your income should be good for the long term.
- Longer contracts
Once a business has invested in leasing new premises, it’s unlikely that it’ll be ready to move on anytime soon. If you’re a commercial landlord, you can sign much longer contracts than you’d expect to with residential lettings.
What are the risks?
- Property damage
Whether it’s caused naturally or by people, damage is an unavoidable setback when you’re letting out commercial property. A comprehensive commercial landlord insurance policy, can help protect you from unexpected damage.
- Potential loss of income
If your property stands empty for an extended period, you’ll quickly start to risk making losses so, before you advertise your building to let, make sure that it’s well-located. Look for signs of economic growth, including those in new and established local businesses.
How much does it cost?
It might be tempting to imagine sitting back and watching your income rise but you need to cover your expenses first. These include:
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- Mortgages: If you bought your property outright, it’s likely that you’ll be paying back the mortgage over a long time. Make sure that you budget for this and only work out your income after factoring in mortgage repayments.
- Property taxes: From local council taxes to those for older buildings, check any tax obligations before signing.
- Agent fees: If you consult the help of an estate agent, make sure that you check the fees first.
- Marketing costs: To boost sales, you might need to consider marketing your commercial property online or through an agent.
What are the responsibilities of a commercial landlord?
You’ll need to provide your tenants with all the relevant paperwork – and to make sure it’s accurate and up to date, too. If you’re concerned about climate change and the emissions from your commercial buildings, there are several ways to shift to a more sustainable business model.
Furthermore, unless you’re planning on using an external property management company or an individual offering management services, you’ll need to be available to help with maintenance, property issues or damage that might occur.
Overall, the benefits far outweigh the risks – as long as you’re ready to be responsible, available and prepared as a commercial landlord.
