Deciding whether to get involved in buy to let property investments is tough. There are lots of pros and cons to buying commercial property and investing requires a significant amount of homework and research. There are many things that you need to consider before you take your first steps as a buy to let investor.
A single bad experience – a tenant who doesn’t pay their rent, for example – can taint your investing experiences almost before you have begun. Buy to let investment is not necessarily a path to quick riches and so you should be prepared to take your time and work at your business in order to make it a success.
Void periods are one aspect that you should plan carefully for. There will be periods when your commercial property is empty – in between leases – and so you need to make sure you have the cash available to continue making your commercial mortgage payments even if you have no tenants in the property.
It’s not just a case of you meeting and interviewing the tenants, signing the contracts and never having to see them again, if problems with the property occur, it is your responsibility to fix it. You’re technically on call 24/7, so if a pipe or the boiler bursts at 2am, it’s your obligation to go round and help to try and fix it. Yes this does include if you live a long distance away or are even on holiday, expect to make a lot of calls to plumbers on a beach somewhere!
As well as maintenance and repairs, you will also have to spend money on the upkeep of the commercial property. You often have to spend more on a commercial property than a residential property in order to keep it well decorated and a pleasant environment for your tenants.
With premises in demand and rents high despite the property sector still being in recession, a landlord is expected to do more than ever to help and assist his tenants, the days of getting the contracts signed and collecting the rent are long gone.
Your reputation as a landlord and the effort you put into your work (and it is work!) will pay off eventually, a better property will always command better rates and be rented by better tenants.
When deciding on a property investment, it is vital that you do your homework. Always carry out research to find the locations that are popular with tenants. For example, you may find that student lets or commercial properties in student areas are highly desirable and can offer excellent returns. This is because your tenants have a huge business opportunity to provide certain services in student areas.
And, as a landlord it is important that you take other responsibilities into account, such as the insurance on your property. Most commercial mortgage lenders will require you to have buildings insurance on the property in order that you (and they) are protected in the event of fire, flood or other damage to the property. You may also want to take out some extended insurance cover to protect yourself against other risks.
The final point we want o offer is this, make sure both you and the tenant know who’s responsible for what and it’s written down to avoid arguments and legal cases. This is vitally important in commercial properties where health and safety law is stringent. Gas and electricity safety checks and matters along these lines should be the responsibility of the business and tenant, once this is all crystal clear, the blame game and finger pointing can’t fester for too long.
Howard O’Gollegos writes for Just Commercial Mortgages the UK’s No1 site for the latest commercial mortgage rates and commercial property finance news.
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