Learn from the experts. One who has been there, seen it, bought it and let it.
Boxpod MD Nick Marlow shares his invaluable advice for people stepping on to the commercial property ladder.
Investing in commercial property can make good business sense as there are a host of people looking for offices to rent, workshops, retail and storage units to let. From Britain’s brilliant small business community and budding entrepreneurs through to global corporations, all are looking for homes for their enterprises. Commercial property to buy and rent is an active, ever-changing market.
Over the years, Nick has built up an impressive commercial property portfolio and he identified the need for an accessible and affordable way to advertise these units – hence Boxpod.
So, what do you need to consider when it comes to investing in commercial property? Nick highlights five key points when choosing where to buy:
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Select your location very carefully. You can change the structure and layout of a building but not where it is.
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Think about demographics such as population, potential tenants etc.
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Consider the value of the area you are looking at investing in. A good indication of a strong area is seen by the amount of new housing development sites and out of town shopping parks
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Consider good road and transport links. If you make a purchase because it appears great value, it may well be a bad investment if it’s too rural and too far from communities and amenities.
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Don’t disregard neighbouring properties and think carefully about any issues that may arise from your neighbours’ businesses.
Further advice includes:
Give careful consideration on tenancy selection giving consideration to types of trade and any implications caused by having two very different types of tenants side by side. A working vehicle garage would not easily sit well next to food operator.
Make sure you carry out robust background work prior to any completion of a purchase and find a good local solicitor to act for you to give impartial advice.
Never put all your eggs in one basket. Look to spread your investments over different areas and different types of commercial property. Buying into one sector such as retail might be costly if that market fluctuates. It’s always good to have a variety of commercial investment assets industrial units to let, workshops to rent, shops and storage units to let. Offer flexible leases to encourage a broad range of tenants.
When selecting tenants always ensure you carry out strong due diligence. Never accept what you are told at face value by enquiring tenants. While it all may be perfectly true it will serve you well to check things out. Better be safe than sorry.
Depending on the level of investment, thinks carefully about what types of lease will best serve you for each tenant. Seek good legal advice.
Stronger tenants are those who embrace the internet and the ever-moving e-commence world. A tenant that operates with a website or plans to have one for their business is often a business that will work out. Businesses that don’t embrace the future and technology will get left behind.