Commercial Property Investments
Interested in a commercial property investment somewhere in the UK? Offices, retail, leisure, industrial – all these types of property can give you a solid return, especially if you buy them BMV.
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What Are Commercial Property Investments
If you’re searching for a profitable long term investment then commercial property can be a great choice, especially if high yield is a priority.
Commercial properties are buildings designed solely for
business use, be that an office, leisure facility or shop.
While commercial properties typically cost more than residential properties to buy, they do in most cases provide a healthier return.
Benefits of Investing in UK Commercial Property
Initially, commercial property often requires more of a monetary investment, as the properties are typically more expensive than residential ones. There are however some great benefits to investing in commercial property, some of which include:
- There are many funding options
- Increased security, due to the lengthier lease
- Usually VAT exempt
- If the property is under £150,000 you don’t have to pay stamp duty
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Our Commercial Property Investment Examples
If you're interested in investing in commercial property then we can help find you some of the best below market deals available to achieve the highest possible yield. Here are just a few examples of properties we've sold to our investor database:
Do the above properties sound like something you would be interested in investing in? Let’s have a quick chat!
What To Consider When Investing In Commercial Property
As we touched on, the financial stake is higher when it comes to investing in commercial properties, so naturally there are certain things you need to consider & research to ensure that the property is a sound investment.
Advantages & Disadvantages of Commercial Property Investment
As with any investment there are both advantages and disadvantages that come with that, as after all it’s a financial risk. We’ve detailed a few of the main ones for you below:
Types of Commercial Properties To Invest In
If you’re looking into investing in commercial property, then you have a lot of options when it comes to the types of property you can buy, in fact you’re a little spoiled for choice!
Here are just a few of the types of commercial property available to yourself:
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Commercial Property Investment Tips
We’ve rounded together some of the best tips to help ensure that you invest in a commercial property that’s right for you.
1. Know the purpose of the property
We’ve described the types of property, but you also need to know what sub-types of businesses that it might attract. Industrial is limited to warehouses and factories, which may only attract larger companies, whereas leisure might attract restaurant owners or pubs.
2. Know your budget & ROI goals
Set your budget and stick to it, always be sure to include your hidden costs list repairs, stamp duty, operation and maintenance fees etc. You also need to understand the return you expect, you should really look for a minimum 10% cash return.
3. We can’t stress location enough!
We’ve touched on this, but commercial property location is so important! You need to think about the type of business the property might attract and what they might need such as central locations, shops, etc.
4. Research the nearby commercial market
We’ll always try and guide you in the right direction, providing you with all the information, however we always stress that you should do your own research on the area and the local market. Dig into available mortgages, rental values, recent commercial property sales in the area, and even labourer rates to get a much better idea of the quality of the investment.
5. Consider Stamp Duty
Stamp duty is slightly different to a residential property and is generally a lower rate. For the first £150,000 you have a 0% rate, but when you get up to £150,001 to £250,000 this jumps to 2%, and there’s a jump to 5% for properties over £250,000.
6. Is the property flexible enough to attract different types of businesses
If you’re looking into commercial property, we’ve talked about the different types you have available to you, however it’s always advised that you pick a property that could potentially attract multiple businesses, like an office for instance. If a property is built for a specific purpose or business type, it might be harder to attract tenants.
7. Yield vs risk
Is it worth it? It’s not risk free, and this completely depends on how much you are willing to risk for what return, but you should always try and maximise your yield, of course.
8. Consult some professionals
There’s a lot to consider when your investing in commercial property, so it might be wise to speak to a few real estate experts to try and understand the whole process and the risks involved before jumping in.
9. Capital Allowance, BPRA & Land Remediation Relief
There are certain reliefs and allowances for commercial property:
- Capital Allowance: Under the Capital Allowances Act this is the amount of expenditure a business can claim against taxable profits.
- BPRA (Business Premises Renovation Allowance): An 100% tax allowance for certain spending to renovate business premises is sometimes available.
- Land Remediation Relief: An 100% reduction and further 50% for qualifying expenditure incurred by companies in cleaning up land which has been acquired in a contaminated state.
10. Get a structural survey
Commercial properties are often large, and the bills for repairs can be quite expensive, depending what you buy of course. Keeping that in mind, we would always recommend getting a full structural survey to pick up any issues before purchasing.
What Else To Know About Commercial Property Investments
Finally, before you go, there are a few additional things that you should know before investing in commercial property, which we've detailed below.
What is the average yield?
A good rental yield for a commercial property is considered to be anywhere between 5-8%.
How do you calculate the yield?
It’s pretty easy to do, rental yield is the monthly income x12 divided by the property price.
How to finance commercial property investment?
You can get something called a Commercial Mortgage, which will normally fund up to 75% of the cost up to a term of around 30 years.
Is commercial property a good investment?
Buying a commercial property presents a higher risk, but it can also be a solid investment that reaps higher rewards, as long as you do your research, it can be a great investment.
Interested in finding the best commercial property deals? Here are just a few of the locations that we have commercial property options available to our investors:
Frequently Asked Questions
Sorry, have we not answered your question on commercial property investment? Not to worry, we’ve collated a few of the most common ones for you below:
Over short time periods property prices do fluctuate, but generally speaking over a longer amount of time, as long as you hold the property for a significant amount of time, you’re likely to make a profit.
Generally speaking they are at a higher cost so naturally there is more risk involved than with a residential property.
It really depends on what you favour, there’s no right answer to this. In both types of property it is about maximising your overall return, and both of which can be just as profitable as the other.
That’s why we’re here! We can source you the best commercial deals available.