Want to know why to invest in commercial real estate at loans Los Angeles? This article is for you.
Investing in real estate is most often synonymous with investing in housing to live in or rent it. However, investing in commercial premises can prove to be an excellent real estate investment. Indeed, buying a commercial space to rent it allows you to generate potentially higher returns than housing, the risks of non-payment are less important and your recourse in the event of non-payment more numerous. We explain everything about this investment.
Investing in commercial premises: what is it?
Investing in commercial premises consists of acquiring the walls of a business with the aim of renting them to an operator. We generally speak of the purchase of commercial walls or store walls. Be careful, do not confuse the purchase of commercial premises with the purchase of the business or right to the lease. Indeed, the purchase of the business is carried out by the tenant of the commercial premises.
More attractive yields than in residential
On average, an investment in commercial premises can generate between 4% and 10% of annual return, that is to say almost twice as much as for residential properties, whose rates of return are rather between 2% and 5%. However, in the case of an investor market, the prospect of a capital gain on exit is sometimes lower than for a home, since the buyer will mainly reason on the rent and profitability.
Also, it is easier to finance commercial real estate. You can buy commercial real estate at loans Los Angeles simply without doing lots of affords .
A more secure rental
Commercial premises leases are leases signed for a period of 9 years with commitment periods of 3 years. Thus the tenant cannot decide to end his lease when he sees fit; he will have to wait for the end of a period of 3 years, which gives you visibility on the rents received. In addition, the tenant has every interest in paying his rent well, even in the event of difficulties, because if he were to be evicted, he would lose a substantial part of his business. Finally, in the event of unpaid bills, the remedies available to you are simpler and faster than for residential property, and the notion of a winter break does not exist. Thus a tenant who defaults can be evicted in less than a year.
To invest in commercial real estate at loans Los Angeles, you must take into account the specificities of this investment:
Location of the commercial property
To make a successful investment in commercial walls, the most important criterion is naturally the location. A good location is a place very frequented by consumers which will allow the tenant to make a good turnover, but it is he who will pay you rent and who will ensure the profitability and sustainability of your investment.
The best locations are those with high traffic. These may be shopping streets in city centres, pedestrian streets or the immediate surroundings of a metro station or tram stop. These locations also offer great security to the investor: the tenants are generally of good quality, and their turnover is well secured.
Buy a rented or empty commercial space?
To maximize your profitability, it is often better to invest in empty commercial walls that need work. Thus at the end of the work, it is possible to obtain profitability greater than that on which the premises were purchased.
It allows knowing the rent and therefore, the profitability of the purchase and it presents less risk over the period during which the premises will remain unoccupied. If you buy empty (frequent case when it is a business located in a new building), you will have to carry out a rent estimate work by looking for information on comparable premises (location, surface, commercialization) to ensure the potential profitability of the investment.
Are you ready to increase your profitability by investing in commercial real estate? Then, invest in commercial real estate at loans Los Angeles.