A Few Starter Tips For First Time Commercial Landlords
It is important that you are thoroughly prepared before deciding to be a commercial landlord. It is potentially one of the biggest financial decisions you will ever make. It is a market that can be potentially very lucrative if it is approached in the right way, or one that can be full of pitfalls for the uninitiated.
No one goes into commercial letting thinking that they will have a bad tenant who causes issues, but it is possible for one to seriously harm your business venture before you have seen the fruits of your labours materialise.
One consideration that is the most important, is to ensure that if your commercial property is empty for some time, that you have enough money to keep up repayments for as long as it may take to get a new tenant to cover the commercial mortgage.
As a landlord, you have a number of duties and responsibilities to your tenants. For example, you may be required to spend money on repairs or maintenance to the property. You will have to be on hand to fix leaking pipes or a broken boiler at any time of day or night which can be tough if the property is a distance from your home or you are away on holiday at the time.
A buy to let property isn't like a regular property, it tend to need a higher quality of maintenance because of the high number of residents that it is likely to have over the life of the property, and also due to the fact that no one looks after a rental property in the same way that they look after their own. To make the environment pleasant for tenants, you will have to regularly invest in renovation.
Being a 'passive' landlord isn't enough in a very competitive market where rent costs are high. It is not sufficient to simply be the landlord who collects the monthly rent cheque.
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.
For you commercial property to be successful and always have a tenant, it's not just about finding a bargain property and sprucing it up. Location is more vital than in the residential sector, buy commercial property where you know there is going to be demand for certain businesses. In most cases, the easiest market to target are students and student areas, newsagents, off licenses and takeaways will all be busy and owning property that can attract these sort of tenants makes good commercial sense.
Remember to obtain buildings insurance for your commercial property. Most commercial mortgage lenders, similar to residential lenders, will require such insurance to be obtained as a condition of the mortgage, and the insurance will usually need to be obtain before contracts are exchanged.
Make sure that there are no ambiguities in the contract when it comes to areas of responsibility. Responsibility for gas and electricity safety tends to fall upon the landlord, but there can be instances where it is the job of the tenant to sort such things out. Be completely clear from the start as to who is legally obliged to do what and there should be little room for dispute later on.
About the Author
Howard O'Gollegos writes for http://JustCommercialMortgages.com the UK's No.1 site for the latest commercial mortgage rates and commercial property finance news.
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