Pitfalls to Leasing Out Your Commercial Property Investments

commercial-property-investmentsLeasing out your commercial property investments is one way to garner great returns and a steady income stream but it’s not one without its drawbacks and challenges. Like everything else, landlords and owners can find themselves swamped with a dilemma or two. If you’re not careful enough, you might just find yourself in the same boat.

So what are the pitfalls to leasing out your commercial property investments? Check these out.

Pitfall #1 – Rental Vacancy

It would be awesome if each and every rental unit is filled throughout the calendar year but what if they’re not? Long rental vacancies can signal not only a cash flow issue but also a depreciating asset that does not generate income.

It takes a well-situated, adequately maintained and effectively advertised asset to drive enough demand to fill the commercial properties with lessees.

Pitfall #2 – Bad Tenants

But not every potential tenant means income. Some of them present quite a burden. Let’s not even begin to talk about the losses. That’ll take up an entire day to finish. Bad tenants do more than just hand out delayed payments or no payments at all. They too present other issues such as a poorly maintained asset that’s been damaged beyond repair.

The fix? Make sure to screen tenants too. If you don’t, you’ll get yourself a headache. Filling up your investments with tenants may be a priority but make sure that they are good ones.

Pitfall #3 – Dilapidations

Dilapidation refers to an asset falling into a state of disrepair as by misuse or neglect by the party responsible for its upkeep and care. Part of leasing out commercial spaces includes repair and maintenance responsibilities. These tasks can be divided or assigned either or both to the tenants and the landlord. These must be carefully laid out and discussed ahead of time and put to paper by means of a contract.

An asset that has fallen into a state of disrepair is a huge loss so be sure that you make the responsibilities of all parties clear ahead of time. Do your part and let them do theirs.

Pitfall #4 – Soaring Ongoing Costs

Repair and maintenance requirements come with costs to investors. This is why it is important to opt for commercial property investments that don’t require too much or too high of a cost in such matter. After all, they’re regular expenditures that will be spent for the entire duration of the asset’s useful life.


What to Ask a Chartered Surveyor About a UK Investment Properties For Sale

uk-investment-propertyBefore closing in on a property, experts would always advise investors and buyers to consult and hire a chartered surveyor to assess and look into things. There’s valid and logical reason to that and we’d like to explain further but it will take us a whole day to finish. Instead, we’re giving you a list of things to ask these professionals when you go about buying a UK investment properties for sale.

  • Market Value – You’ll want to compare the asset’s current market value against its selling price. They’re not one and the same and variances may occur. More importantly, a surveyor can validate the numbers. If you’re a smart investor, you’ll take everything sellers and brokers say with a grain of salt.
  • Useful Life – How long will the property last from today? This is an important detail for you to know as this will showcase whether or not the asset shall serve a purpose for as long as you’d need it for.
  • Condition – Is the structure and foundation still strong? Will it take, say, an earthquake? What are the renovations to be done if any? Are there any necessary upgrades in terms of the building, fixtures, plumbing, roofing, wiring and the like?
  • Ongoing Costs – Have a clear estimate of the repairs and maintenance costs that you are likely to face should you pursue the property. Some assets pay appear affordable upfront but have staggering ongoing expenses that will leave you in the dumps in the long run.
  • Depreciation – All properties depreciate and these are expressed in terms of expenses deducted on the asset’s value. You’ll want to know the rate at which it goes so you can determine if the investment is good for your equity.
  • Appreciation – In the same manner, there are chances that a particular UK investment property grows in value. This is of course given several factors like upgrades, renovations, the economy, nearby establishments, location and more. It’s great to know should you want to lease out or resell the asset now or sometime in the future.
  • Safety – Is the asset itself safe? How about the neighborhood and its location? You can have your surveyor look up on safety issues and details as well. Besides, why won’t you?

Remember to ask regarding these things from your chartered surveyor before getting a UK property investment!