Any type of property, commercial or residential, can be a good investment. However, commercial investment property for sale UK typically offer more financial reward compared with residential properties, which include rental apartments or single-family homes, but, there also can be more risks. Therefore, knowing and understanding the full scope of pros and cons of investing in commercial properties is crucial in order to make the right investment decision.
Level of investment and return
Buying a commercial investment property for sale in the UK can start from a similar level as in the case of residential property, only to a much larger scale and with a potentially risk. You need to determine what you can afford, including any ongoing costs for the lifetime of the investment, and what sort of commercial property you can expect to find with that level of investment.
Even at the same location and with the same level of investment, you might get many more warehouses than shopping centres, whilst an office space in a small town might be much cheaper than one in, or near, a large city. Your projected return will be affected by location, infrastructure, socio-economic factors, and the availability of the workforce.
Commercial property often has longer leases compared with residential, guaranteeing income for longer durations. However, there is a downside to this. You need to factor in the level of risk for periods when you have no tenants and you need to identify for how long you can weather that storm. Whilst a residential lease might be for six months or a year, a commercial property lease agreement may be for 10-15 years. You need to consider all these risks when looking to buy a commercial investment property for sale in the UK.
Duration of investment
Think whether you are looking for a short or long term investment. One of the common pitfalls in the case of commercial property is focussing on the short term, and not the long term.
Maybe you know what to expect or maybe you’re thinking that buying a commercial investment property for sale in the UK is a good way to get rich quickly. When planning your investment, consider seasonal fluctuations and be informed about planning for the specific region. If there are regeneration proposals in place, consider how this could affect the site you are looking at. before you invest search for planning decisions in your area.
- Do you have a timescale in mind when it comes to buying a commercial investment property for sale in the UK?
- Are you looking for a return on investment over the short term?
- Are you prepared to wait for the right opportunity to come along?
- Do you want to invest right away to take advantage of a local opportunity?
- Are you clear in your mind about what exactly you want, and where and how you’re going to finance it?
- Are you studying the market cautiously enough to take note of potential investments that generate an acceptable return on investment?
If you have some experience in buying commercial investment properties for sale in the UK, then perhaps you will already know what to do next and are ready to invest as soon as you spot the opportunity.
However, if you are new to commercial investment, and don’t know what to expect, the type of property to invest in, or how best to finance your investment, then you will not want to rush into anything. In this instance, speaking to a commercial property expert should be the way forward as their advice might be more useful than you think, and in turn, is likely to maximise the return on your investment.
Types of commercial investment properties
How do you decide on the right type of commercial investment property for sale in the UK?
Perhaps you want to invest in a retail environment in a popular commuter town with excellent transport links, near your home as this is where you want to locate your business.
Do you have knowledge in a particular area of business and understand the type of office space businesses would rent or know the gap in the market for quality office space?
You might instead consider a small industrial unit within an industrial park on the fringes of the city as it is more affordable, and likely handled by a management company.
Other alternatives for buying a commercial investment property for sale in the UK include a new office or warehouse development in an up-and-coming area that is attracting big names in the industry or known for its start-up culture. If you are willing to wait to invest in commercial property, then keeping a close watch on regeneration projects may help you to time your investment right. This will not only keep you ahead of the crowd, but you can secure a more lucrative deal also.
Why a particular commercial property?
You might have reasons for investing in a certain type of commercial property. Will you select a commercial investment property for sale UK based on your heart, or your interests?
Maybe you have:
- Refurbished a number of shops.
- Been involved in selecting industrial spaces for your company.
- Identified an up-and-coming area full of office block developments that you want to invest in.
- Worked with companies in the commercial property sector.
- Worked with commercial landlords or helped prepare leases.
If you are totally new to commercial property, you should seek professional guidance, ideally from as wide a range of sources as possible as this will help you get a better perspective- including people who have already invested in commercial property. Particularly, make sure you get legal advice. A solicitor can help you secure the best deal and advise you on the fine print of the lease as this can be particularly full of pitfalls for experienced as well as novice investors.
Lease or purchase?
Depending on your unique situation, knowledge and experience, decide whether leasing or purchasing the commercial property will be more useful.
There are advantages and disadvantages of both the options so it is important to establish what is best for you. So, get professional advice to determine the better option.
When you have identified a commercial investment property for sale UK that you are interested in, it is the time to seek advice from an experienced commercial property lawyer who can help you understand the lease, the clauses and the other technicalities.