Think Twice Before you Spend Your Savings in a Commercial Property

by Ravish Singh SEO Executive

Commercial properties are more financially rewarding as compared to the residential properties.
Then what’s with the title?
Yes, it is true that commercial properties (like office, retail, and industries) offer a higher return on investment but it is also a fact that the risk factor is higher compared to the other kind of the real estate. If you are barely scratching the surface of the real estate right now, eying for such properties is not the right decision for you. One need to have an experience in the niche and an eye for the investment that feels right. There are a lot of laws that govern the buying and selling of the commercial properties in India which are a little different from the residential properties.
Let us see what factors make the commercial property investments a complicated one.

1. It is not for the inexperienced investors
You can buy a house and give it out on rent without ransacking much knowledge about the market. Just one day read and one-hour discussion with the experienced person is sufficient to gather the essential knowledge. You only have to know the market value of the property, the renting laws, neighbourhood appreciation, and cost of further maintenance of the house. The commercial property dealings are, however, not as easy as it sounds. There are a lot of factors that govern the sale of the commercial properties that simply cannot be learned in a day. It not only includes the quality and location of your property, but also the type of business that owns it, the lease period, the local laws etc.

2. Recession affects the commercial units
The glitch in the economy affects both the residential and the commercial units but more the later. The property prices go down but never the need of the house to live in. Even when the market is slow, people will continue to buy houses but the same cannot be said for the commercial units. Sometimes, the companies fire the whole staff and shut down. As such, you can easily lose the tenants and the property may be left vacant for the months or years.

3. The true value is disguised
The price of the residential flats in Jaipur is easy to determine. Just go to the neighbour who recently bought the house and compare the prices based on the size of our house. The two commercial properties are different and there is no way only the area and the location can differentiate the prices. The use of the property also matters. If it is going to be a mall, the prices appreciate steeply as compared to when it is going to be used as the company or industry. The desirability of the property i.e. how much income it is getting to the tenant also matters and there is no formula to calculate that factor.

4. Getting the right tenants is exhausting
It is said that you need to be very patient while searching for the commercial property to invest in. But it is more important to find the right tenants for it. The commercial properties are lent out for a longer period of around 10 years but once vacant, it is tougher to find the next tenant. The time for which the property is vacant, the taxes have to be borne by the owner which costs a fortune. The lease agreement is also not easy to understand for an amateur.

5. The future of the location is not sure
Location, location and location.
Every broker of the world would tell you that the location is the most important concern for the property buyers. That is true. The residential properties are built in the prime areas with the robust infrastructure which guarantees that the price appreciates with the time. The location is also important for the commercial properties, but they are built on the outskirts and you never know which new project stands in front of your property within a year. The new commercial property in the vicinity of an old property depreciates its value.

Now when you have thought twice, do not have any further thoughts and invest in the commercial property if it is the right fit for your future. You have to be vigilant and have a solid groundwork strategy. Contact us for any assistance in buying the commercial property in Jaipur because knowing what you are getting into is extremely important.