Investing in a commercial property?
Discussion
I'm looking at investing in a commercial property to rent out. I'm just wondering what the caveats are of doing so? I imagine that they're less hassle than dealing with tenants in a BTL.
I don't know much about mortgages either. I know they're different from domestic properties, but I'm not sure how. Ideally I need some basic info like deposit requirements etc.
Thanks all.
I don't know much about mortgages either. I know they're different from domestic properties, but I'm not sure how. Ideally I need some basic info like deposit requirements etc.
Thanks all.
I sell and lease commercial property and, subject to what you want to buy, you’ll likely find that the freehold market is fiercely competitive.
I believe you’d need a 30-40% deposit, however the whole process of selling to someone requiring finance is one I tend to avoid since it takes significantly longer for a transaction to progress, plus any purchase needs a bank valuation, lender solicitor requirements etc.
I have a long list of cash buyers I go to with any investment opportunity, which I suspect is commonplace for many agents. Many vendors don’t want to entertain first-time buyers or those reliant on finance for the reasons given above, in my experience anyway.
I believe you’d need a 30-40% deposit, however the whole process of selling to someone requiring finance is one I tend to avoid since it takes significantly longer for a transaction to progress, plus any purchase needs a bank valuation, lender solicitor requirements etc.
I have a long list of cash buyers I go to with any investment opportunity, which I suspect is commonplace for many agents. Many vendors don’t want to entertain first-time buyers or those reliant on finance for the reasons given above, in my experience anyway.
I have only my personal experience of this, of course what i write is perhaps biased by my decisions but it is a perspective. I owned a small stand alone office on a business park for 10 yrs until I sold it in late 2019. I got back marginally more than I paid but less than the figure including stamp duty, of course I had use of one floor for 10yrs, let out with varying degrees of success the ground floor, never really getting a tenant who could commit for more than a year or so. The rates and maintenance and estate fees were all paid by me.
It proved to be a decent store of wealth in low inflation times and stopped me wasting the money. It was not a get rich quick scheme, Of course I got some rent from my business.
The biggest issue was finding a tenant for the floor I didn't need, we constantly compromised on rent or length of lease. It did seem different last year from what I hear but I think the norm is like I experienced.
There was various schemes or ideas to save on rates with leases etc but all were questionable.
Fast forward to today and I don't really miss it except as a store of wealth but assuming difficulty as was my case in converting to flats ( the location wasn't suitable), there would seem to be no drawer for capital growth.
In my business, I can think of 3 sub suppliers who have lease commitments and are struggling, I reckon 2 have directors guarantees but and I am living this, the court system is a mess, we have a contract dispute and we are owed a large sum of money but the other side are making claims, that money was due to us in July 2021. I heard from my Direct access Barrister that best guess is Oct this year for a judge to give direction and early next judge to hear the case. Now I write this in the context of a dispute etc and maybe with commercial leases etc the route is quicker or easier but getting them out doesn't get your money. Of the 3 sub suppliers, 1 at least is talking to a quasi CVA type arranger who will no doubt throw a giant spanner in any directors guarantee at least long enough for it to hurt you. On You tube, Paul Smith, Touchstone education always pops up, if he was making so much he wouldn't tell you or me. There is no doubt money somewhere but look at all the Insurance co's, Funds etc who have money on their books and no where to put it, getting a bank loan and having that albatross around my neck wouldn't be for me.
It proved to be a decent store of wealth in low inflation times and stopped me wasting the money. It was not a get rich quick scheme, Of course I got some rent from my business.
The biggest issue was finding a tenant for the floor I didn't need, we constantly compromised on rent or length of lease. It did seem different last year from what I hear but I think the norm is like I experienced.
There was various schemes or ideas to save on rates with leases etc but all were questionable.
Fast forward to today and I don't really miss it except as a store of wealth but assuming difficulty as was my case in converting to flats ( the location wasn't suitable), there would seem to be no drawer for capital growth.
In my business, I can think of 3 sub suppliers who have lease commitments and are struggling, I reckon 2 have directors guarantees but and I am living this, the court system is a mess, we have a contract dispute and we are owed a large sum of money but the other side are making claims, that money was due to us in July 2021. I heard from my Direct access Barrister that best guess is Oct this year for a judge to give direction and early next judge to hear the case. Now I write this in the context of a dispute etc and maybe with commercial leases etc the route is quicker or easier but getting them out doesn't get your money. Of the 3 sub suppliers, 1 at least is talking to a quasi CVA type arranger who will no doubt throw a giant spanner in any directors guarantee at least long enough for it to hurt you. On You tube, Paul Smith, Touchstone education always pops up, if he was making so much he wouldn't tell you or me. There is no doubt money somewhere but look at all the Insurance co's, Funds etc who have money on their books and no where to put it, getting a bank loan and having that albatross around my neck wouldn't be for me.
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