Maunder Taylor, a family-run company, are the people to turn to if you are interested in commercial property investment in London or Hertfordshire. Here are our five key factors you should consider before investing in any type of business premises.
Know Your Budget
With any form of commercial property investment, you must work out not if you can afford the initial outlay plus a number of additional costs. If you opt to invest directly in a property, you could be responsible for property maintenance fees and staff salaries such as maintenance workers, cleaners and receptionists. With shared investments, you will usually pay fees to whoever you appoint to look after the premises on your behalf.
Remember, commercial leases usually last much longer than their residential counterparts, which means you could be guaranteed an income for a period of years, rather than months.
However, the longer the lease, the greater the risk of the property being left vacant for long periods of time. For instance, your tenant may opt to move out because they need larger premises or wish to relocate. In the current lockdown situation, the Government has given all retail tenants a three-month moratorium, so they will not be evicted for failing to pay their rent.
Know Your Area
The mantra ‘location, location, location’ applies just as much to commercial property as it does to buying your own home. Before committing yourself, find out as much as possible about the local area. How much traffic is there? What is the human footfall like? Are the premises easy to find? Where are the nearest transport links?
Ensure you research the size and demographics of the local population. If the number of people who live locally is falling, then this could be an indicator that the area is heading for a downturn. Find out what the area is like at night, as well as during the day. If your potential investment site is well lit, it’s far less likely to be vandalised or be broken into.
Know Your Market
Commercial property is usually split into three categories – retail, office and industrial. What works well in one neighbourhood will not always bring in a good rate of return somewhere else. If a town or city is already well served with shops and offices, for instance, warehousing or industrial premises may be a wiser investiment choice.
Political and planning decisions can also influence how well your investment performs. If the local council has just given the green light for a major regeneration project around the corner, will this boost the overall footfall? Or will it take business away from your own property?
The outbreak of coronavirus may see a long-term shift away from ‘bricks and mortar’ shops to online retail – which could be good news for out-of-town warehouses and distribution sites. Office accommodation may be less in demand as increasing numbers of companies opt to encourage their staff to work from home.
Know Your Ownership Options
At Maunder Taylor, we offer our clients the choice of shared or direct investments.
With shared investments, our commercial management department will take on the day-to-day responsibilities, with investors owning shares in each property. This typically provides a 7-8% net yield and management costs are payable quarterly in advance.
With direct investments, we will recommend any potential properties in the areas you may be interested in, and act for you in any negotiations, right up to the point where you need to instruct a solicitor.
Know Your Legal Obligations
Remember, commercial landlords may be responsible for gas, fire and electrical safety, particularly in any communal areas of the building, depending on the exact wording of the lease. The outbreak of coronavirus means you also have additional obligations as laid down by Public Health England and the Department for Health and Social Care. For instance, if there is a confirmed case of COVID-19, you may be asked to evacuate, close and decontaminate the premises.
However, if you opt for a shared investment, then all of these responsibilities can be taken out of your hands. At Maunder Taylor, our commercial management team will make sure you are fully compliant with all your legal obligations.
Commercial Property Investments with Maunder Taylor
At Maunder Taylor, we have unrivalled expertise in the field of commercial property investments in London and Hertfordshire. If you would like to learn more, then follow this link or call Ben Ewen on 020 8492 5526. We also offer many other property-related services, including estate agency, property valuations, insurance, lease renewals and the resolution of disputes.