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2019 Important rules of commercial real estate investing

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2019 Important rules of commercial real estate investing

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  1. 2019 Important rules of commercial real estate investing

  2. Introduction Investing in commercial real estate is not as difficult as it may appear. If you follow the principles of long term investing, you can earn much higher returns than most debt instruments.commercial space for rent in singapore Keep the following points in mind while investing.

  3. Content Location 01 Market rent vs in-place rent 02 Quality of tenant 03 Base rents vs fitout rents 04 Security deposit 05

  4. 01 Location Location is everything. Commercial properties provide returns through two avenues— rent and capital appreciation. Both are heavily dependent on the location. Look for locations where vacancy is less than 5%. This will mean that supply is in check and tenants are less likely to vacate, leading to higher rents and capital appreciation.

  5. 02 Market rent vs in-place rent This is a slightly advanced concept that institutional investors use to see how risky the property is. Let’s assume that there are three properties available at more or less the same price but each with a tenant paying different rents.

  6. 03 Quality of tenant A good tenant can significantly increase the value of a commercial property. Looks for bluechip multinational tenants and avoid smaller and unknown companies. Good tenants pay rents on time, pay higher deposits, stay longer and increase the value of the property.

  7. 04 Base rents vs fitout rents Developers often dupe investors by showing higher rental returns by including the fitout rent component while hustling them for a higher price. But here’s the catch: fitout rents are not permanent and are payable only for a fixed period (generally five years).

  8. 05 Security deposit Security deposits in commercial properties vary between 10 and 12 months’ rent. Be careful when a tenant offers 6 months or less as it means that they could be looking at a short-term option or have cash flow issues. Startups typically tend to ask for smaller deposits and shorter lock-ins.

  9. Conclusion Security deposits in commercial properties vary between 10 and 12 months’ rent. apartments for rent in singapore Be careful when a tenant offers 6 months or less as it means that they could be looking at a short-term option or have cash flow issues. Startups typically tend to ask for smaller deposits and shorter lock-ins.

  10. THANK THANK YOU

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