While many people looking to invest in real estate focus on residential properties, the commercial property market is also a good option for a number of reasons. Find out what you need to know about investing in a commercial property.

Benefits for the investor.
Commercial properties generally give much better financial returns than residential properties do. Investors look for properties with the potential to increase in value and generate a good income each year. Commercial properties tend to allow for a high increase in rent over a long time period. A long-term investment works well because while there may be temporary drops in value, over time the property value should even out and provide good results. Conveniently, commercial tenants pay for costs such as rates, body corporate fees, utilities and insurance, but owners usually need to cover maintenance and repairs.

Useful things to consider.
Ideally you will need a property in a location that is attractive to longterm renters. A good location will have easy access to motorways or main roads and nearby shops. Consider how easy it might be to find new tenants if the building becomes vacant. The risk of a prolonged vacancy can put off potential investors because there will be no money coming in during that time. If the space is adaptable and can be used for a variety of uses, it should be easier to find someone to rent it.

Banks are well aware of the financial drain that an empty rental building can be on your resources, so they may only give you a loan for up to around 60% of the property's value. Buying something too expensive can become problematic if the tenant has trouble paying regularly or vacates the property, leaving you to cover the bills while looking for a new tenant.

A multi-tenancy property can be a clever idea for reducing risk, as even if several spaces remain vacant for a prolonged period, chances are that the others will generate enough income for you during that time. More tenants can mean more work managing different tenants' requirements and lease renewal periods, however.

Check the details.
Many commercial properties for sale come with existing tenants. If this is the case it is necessary to check the terms of the lease to be sure that you understand the details, your obligations as the new owner, and the tenants' understanding of what is expected of them.

As with any real estate purchase, professional financial and legal advice is useful so that you know exactly what you are buying, what your responsibilities are, and how you can manage your investment wisely.

Visit naiharcourts.net/nz to see what commercial opportunities are available across New Zealand today and visit mortgage-express. co.nz to ensure you are in the best hands to fund your commercial property venture.