Things To Keep In Mind While Buying Office Space
Investing in real estate is seen as a path to quick riches. Investors tend to hold on to property for long, and sell it when property prices appreciate.
If you have enough cash to make down payment, it is easy to invest in commercial real estate. Even if you do not have enough cash to make the down payment, it is possible to borrow money or follow one of the many unusual, creative paths to property ownership.
Buying commercial real estate is a complex undertaking. The financial returns from investing in commercial real estate depends on how well you manage your investment.
Keep these points in mind, if you plan to invest in commercial real estate:
Reputation of the developer: Buying office space involves large sums of money. Do good research before you decide to invest in a property. Find out whether the developer is trustworthy or not from the internet, and by asking people who are more experienced. Pick a developer with at least one successfully delivered project. If the developer is new in the market, check the background of promoters and their credit ratings (if available).
Your asset should earn for you: Find out whether you can put the property on lease for a while. This may cover EMIs and the cost of maintenance. Leasing a commercial property is a good option. Be cautious while buying under construction properties. It is better to invest in properties that you can earn from.
Green revolution: If you are looking for a long-term investment, choose green housing or environment-friendly projects that use special technologies to provide monthly savings on electricity bills and other health benefits.
Invest in upcoming areas: In early 2000's, it was wiser to invest in Gurgaon and Noida, compared to Delhi. In both these cities, investment in commercial real estate is high. The demand for residential real estate is high too. It is safer to invest in areas where infrastructure is rapidly developing.
Get a partner: There are buyers who have good ideas, but are short on capital. If you are one of those, getting a partner helps. It is important to have a contract that specifies who is responsible for what and other terms of the contract.
Invest in equities/shares: Instead of investing large amounts of money, investors can buy shares in real estate by making periodic payments. There are both advantages and disadvantages to this. Weigh the pros and cons before you make your choice.
Investors should take potential risks into account before investing in commercial real estate.
Poor location: A neighbourhood where real estate is in huge demand today may become less popular over time. The reasons could be anything, like slow infrastructure development, low connectivity to infrastructure networks, etc. Localities that are not so good today may become popular in the future. Be prepared for such fluctuations in demand.
Illiquid asset: It is not always easy to sell real estate, especially when market conditions are not good. Investors who own property for commercial purpose should at least have something to sell if they need cash influx to revive a lagging business.
Fragile cash flow: It is possible that tenants will stop paying their rent under certain circumstances. Buildings may need unexpected, expensive repairs. Cash flows will be lower when you are simultaneously repairing your property and paying fee to lawyers to handle disputes with tenants.
Today, real estate markets in India are stagnant. It is a buyer's market. If you invest wisely, it is easier to earn high returns when market conditions improve.