The investment in a commercial location may be due to essentially two reasons: the first is the purchase to develop our own business and the second is the purchase for the subsequent rental and to obtain a return.
Tips for investing in commercial space
Regardless of the reason for our decision to invest in a location, it is important to take a series of precautions to ensure that the investment is successful and meets our expectations. Asset management specialists Maritime Capital propose several tips for investing in commercial space:
When it comes to investing in a commercial establishment it is essential to seek advice in relation to several aspects: retail market, technical aspects of the premises, and legal issues that affect the operation.
A real estate consultant specialised in retail can advise you on the different options that exist in the market according to your possibilities, the prices and the profitability that you can obtain. A property surveyor is essential, on the other hand, to know if the premises meet the technical requirements required by the activity you want to develop (emergency exits, fire protection, etc.)
And, finally, a lawyer specialising in real estate issues will be essential for all the documents you sign and in the purchase transaction that you make.
Find out about licenses
One of the most important aspects of investing in commercial space is that we can develop the activity we want in that place. For this, it is important to obtain information on licenses, planning permission, and uses permitted in the space being considered.
Another important aspect that can affect the commercial premises in which we want to invest is the community byelaws which might affect the building where the premises are located. These can be obtained from the local authorities.
You can request a copy of the statutes, typically, in the Property Registry. In the statutes, you can check if there are limitations that may affect the premises in terms of distribution, use, etc.
Before investing in commercial premises, it is important to know what profitability we can obtain. For this we must consider that there are three types of profitability:
- The gross profitability: this is the difference between the total investment made and the annual income provided by the rent.
- The net profitability: this takes into account expenses and taxes (taxes on real estate, insurance, community expenses, etc.).
- The return adjusted to risk: this takes into account the periods in which the premises are not rented or variation in rental income.
Search for financing
In the case that you need financing for the purchase of commercial premises, it is important that you consult several entities to have several options and be able to compare the advantages and disadvantages of each one. You need to consider aspects such as interest, conditions of attachment, the need for guarantees, the amount of the loan as a percentage of the appraised value, the conditions for a total or partial repayment of the loan, etc.