To make this shift, investors need to be aware of the differences between commercial property and rented accommodation. Many commercial properties cost a lot more than residential property. Some require specialist knowledge of a particular commercial sector. For example, for office property, investors need to be aware of the changing demands from companies. Modern companies do not simply want desks and meeting room space, they need high-speed broadband and facilities such as gym areas and other recreation facilities. This may require extra development costs, but in return higher rents can be charged.
Commercial property is higher risk because vacancy periods can be higher than in residential property.
Some investors pool their resources with others by using property investment trusts. This can reduce risk but does not maximise potential profits.
Landlords are advised to seek professional financial advice and thoroughly research the commercial property market in both the location and business sector they are considering investing in. Commercial mortgages and bridging loans are available from a wide range of sources. It is difficult to find the best loan deals unless an investor uses an expert broker who can find the best short term and long-term finance offers that are suitable for a landlord’s individual business situation.
Compared to many other investment products, commercial property investing can be a better way to increase the income of buy to let landlords.