How to Minimize Risks While Investing in Commercial Real Estate Investment? - Top Builder in jaipur
10th Jan 2024

How to Minimize Risks While Investing in Commercial Real Estate Investment?


When as an investor you think of investing in a commercial property, you have one thing in mind – the value of the property should go up and the income will continue to increase. However, you also have to plan for the downturn too.

There are ways to minimize your risks when you invest in a commercial property in any part of the world, a few have been suggested by The R-Tech Group, the proud developer of commercial property near Jagatpura Jaipur:

1.    Choose a property with multiple tenants instead of single tenant. This will spread out the risk as you don’t put all eggs in one basket. When a tenant terminates a lease, you will potentially just lose a portion of the total income. It’s also easy to find a tenant looking for a small unit.

2.    Choose a property with long term leases over month-to-month leases. Month to month tenants can move out with short notice when their businesses go down.

3.    Avoid having most of the leases expire at the same time. That way in the worst case, you will not have to face with a scenario that the whole building is vacant.

4.    Choose brand-name over no-brand tenants when you have a choice. Leases from brand-name companies are sometimes guaranteed by the corporations. So, when they have to shut down the store, the corporations will continue paying rents. According to statistics, brand name tenants are more likely to be in business next year than non-brand name tenants.

5.    Ask for lease guarantee. When a tenant is a small corporation, ask the owner of the corporation back up the lease with his or her personal assets. This way you are more likely to get your rent paid during bad times.

6.    Have a mixture of tenants with different businesses. For example, you don’t want to have 3 barbershops in a shopping centre as they will compete against each other and take the other out of business. When the economy slows down, it may affect a certain industry. By having tenants with different businesses, you reduce the chance that the economy affects most of your tenants.

7.    Request seller for rent guarantee. When you purchase a commercial property that is not 100% leased, ask the seller to provide a 12-month rent guarantee for vacant units. That way you have up to 12 months to look for tenants.

8.    Invest in a stable and growing area instead of a declining area. Your tenants are more likely to do well and have money to pay you the rent.

9.    Choose triple-net leases over gross leases. Maintenance is something varies from year to year. On the triple-net lease, the tenant is responsible to reimburse you with all the expenses so your net income does not fluctuate.

10.    Avoid property that has chemical. If you are an investor looking for a passive investment, you should avoid gas station. When there is a gas leak, the soil is contaminated. You won’t be able to sell the property as no lender will provide financing.

With all that said, here we are with a few generic tips every property buyer (new or pro) must keep in mind before he enters the market to buy commercial property in Jagatpura Jaipur – Comprehend the present condition of the commercial real estate market – we are not saying to become pro at investment strategies, we know that it takes years of study and experience. However, it is important for you to make an informed investment decision by understanding the current market and latest property trends along with any changes in property prices. To start.

Establish a fixed budget for your investment and set realistic income goals. Commercial properties offer a wide range of options – from small retail shops to large corporate headquarters. Knowing how much you can afford to invest or potentially risk is crucial before making your first property purchase. Additionally. Consider the type of property you need and the income goals you are aiming for. It is natural for first time investors to feel overwhelmed at times. In such situations it is best to give yourself time and thoroughly research all aspects of property investing.

But if research and due diligence become challenging don’t hesitate to seek help from professionals who specialize in commercial property investments. They can guide you on the right track. Remember that putting time and effort into understanding wise commercial property investing can greatly increase your bank account. Always prioritize research, location, and finances. And when in doubt consulting an expert is advisable.