From the times unknown the one investment which has been the most consistent is Real estate. Though the residential properties have their esteemed respect in the real estate market nowadays people are more inclining toward buying a commercial property. They rent it out due to more rental yield. The duration of the lease of commercial property is generally more which ensures your rental income for a longer duration of time. But they lack knowledge about the things they should consider when buying a commercial property for investment.
Fortunately, we also bought a commercial property during the nationwide lockdown due to Covid-19. But before buying it, we studied commercial properties and consulted a few experts in the real estate field. Then we were able to figure out the top 5 things one should consider before buying a commercial property for investment. Without further ado let’s dive right into them –
1. Location
Location is the key to marketable commercial real estate. It will mostly govern the price at which you would buy or sell a property. So, if you are looking to buy a new property then always have a look around the location.
While selecting a location, you should assess the connectivity of the property with the other parts of the city. What is the average time it takes to reach the nearest Railway Station or the Airport? What kinds of structures already exist near the location? Do these structures are in line with the commercial project you are thinking of? Is there any environmental concern related to the property?
These are the questions you surely need to have answers for before buying commercial real estate.
2. Future developments
It is not just about what is presently developed near the commercial real estate you want to buy. But it is also about the future developments that are going to happen in the nearby area. These developments will decide whether the property you are buying will appreciate or depreciate. These developments will also decide the rate of appreciation.
You can check the upcoming projects and land allocation on the master plan of that area. This master plan is available on government websites. These developments can range from the construction of a school nearby to the construction of an international airport. So always take a look at what kind of upcoming projects are there; the timeline of these developments.
Usually, this point is overlooked by the majority of people while they consider buying commercial property as an investment. Hence, please pay good attention to it.
3. Builder Background
If you are buying a property in a commercial project which is still under construction then this factor becomes as important as the location itself. The reputation of builders specifically in the Delhi-NCR region is not so good, various abandoned projects are proof of that.
Though with RERA coming into power, this thing has improved but you still should check the builder’s background before investing. Check his record of delivering the projects; check his legal history over the Ministry of Corporate Affairs site. You can also get the Builder’s balance sheet checked from a CA friend of yours. You want a builder who has completed his previous projects on time and has rich experience in renting commercial real estate.
4. RERA
RERA stands for Real Estate Regulatory Authority. This has come into power under the Real Estate (Regulation and Development) Act, 2016. The reason behind this act was to save the buyers from the ill practices followed by the builders.
Earlier, the builder used to deviate the funds collected for one project to another project leaving the first project in the middle. This used to result in delayed possession. This delay in possession used to prove very costly for the buyers.
Now, this act has put several checks on builders which will protect the buyers. The builder now has to get the project approved by RERA. During the process of approval, RERA checks all the documentation. He now has to declare the date of possession which he cannot afford to miss due to penalties imposed on delay.
Also, he has to get clearance from the environmental department before the start of the project. He also has to submit the plan of the structure proposed and his accounts are checked to ensure that he has money to execute the project.
To safeguard yourself, always check whether the builder is RERA certified or not; check whether the project is RERA cleared or not.
5. Consult an expert
Consulting an expert will help you select the best property out of all the options you have. The expert have insight into the current market situation. Consulting them will help you to get the price of the property. They can find the hidden flaws in the deal which might look good to you. They can also help you find a property that is best according to the motive of your investment.
Buying a property can be a task involving a lot of paperwork. If you are not from a legal background then this can be a task you would need help for. So an expert from this field can be helpful here as they are familiar with such paperwork. They can also be helpful in renting out commercial real estate through their contacts.
Consulting an expert can take some of your worries and you can smile like the guy in the picture.
So guys, now you know the 5 things one should consider before buying commercial property for investment. Also, if you want some suggestions over which commercial property to buy then you can contact us on our mail, we would definitely reach you.
