Investing in commercial property may be the best financial decision you’d ever make.
Whether you have several properties to your name or you’re just starting out as a property owner, you’ll inevitably have to decide on whether you should rent your property.
Renting a commercial property can be a long and tedious process, even for people who are steeped in the business. It’s a different ball game from selling a home. It requires more extensive planning, research and time. Here’s a short guide on renting your property,
First, understand the responsibility involved
You need to familiarise yourself with the complete guide to being a landlord and decide if it’s a responsibility you can and are willing to handle.
Similarly, you might need to gather some knowledge regarding commercial lease contracts. What is it? A commercial lease is a form of a ‘legally binding contract’ between a landlord and a business tenant. The lease summarizes the responsibilities and rights of both the tenant and the landlord during the occupancy period. You might also need someone who can give you commercial lease advice for a better understanding of the legal contract. For that, you can contact a commercial solicitor available at firms like Kaiser Solicitors.
Remember that there are several advantages of renting, such as deterring a burglary by the simple fact people occupy the property. You also get to enjoy the ease of property breaks and earn income that takes care of the bills and even potentially provides a profit.
However, choosing to become a landlord is also an extra responsibility you’ll need to fit into your life, while also preparing your mind for the occasional bumps on the road.
You’ll need to keep a record of the repair and maintenance needs and get them done quickly. You’ll also need to collect rent, pay more premiums for your landlord insurance policy, and try to keep your property in good condition by ensuring your tenants are the responsible type with good housekeeping habits.
Understand potential red flags
Looks can be deceiving. Someone who looks great on paper may turn out to be a thorn in the flesh in real life. For example, they may not pay their rent on time which can cause a lot of hassle, especially with mortgage payments that you will be making at the same time. If this becomes a recurring theme, you can send them a Pay or Quit Notice (click here for info) legally, so your bases are covered ensuring you went through the proper channels if this escalates into a court situation.
The truth is that when you rent out a property, you’re actually taking the risk of property damage. As a homeowner, property maintenance is your responsibility. You don’t relinquish or transfer that responsibility by renting your home.
However, with the right homeowner insurance, you can ensure your property is adequately protected against any damage, disasters or lawsuit.
Demand for rentals
The most important thing you should find out before investing in real estate in any area is the demand for real estate (and other related statistics) in that location.
This is vital because as a property investor, you want to make sure you’ll get good returns on your investment. If you can’t find enough paying tenants in that area, your chances of making a profit or sustaining your source of income are diminished.
Besides, if you do find a tenant in a location with low rental property demand, the rental income and rate of return on investment will be low compared to how you’d wish them to be.
Go it alone or set up a team?
When going into property investment, you also have to decide whether to manage your property yourself or instead hire a property manager or company to do that on your behalf.
If you want to go it alone, you must remember to set boundaries. The rules require that if you don’t have a property manager or management company to take charge of your real estate investment, you must live within a certain distance from your rented property.
Keep in mind that renting out your home is no guarantee you’ll be earning surplus money. Don’t forget that as much as you’ll earn income from your rental property as a real estate investor, you’ll also have to take care of certain costs such as repairs, maintenance and insurance.