Commercial real estate property can be a great investment opportunity. If you want to make the most such a project, it’s prudent to avoid some common yet expensive mistakes that could ruin your investment and lower your monthly income.
Commercial real estate property makes an excellent way to build your wealth and safeguard your cash flow. A growing population translates into increased demand for both living and retail space. Retaining the help of a reliable property management company in Singapore can help you make the most of the investment.
Pick the right upgrades
Naturally, you’d expect to charge a higher rate after sprucing and upgrading a rental property. While some people report positive results with such a move, you need to tread carefully. You need to be sure that the resultant hike in rent prices is enough to justify the money that goes into upgrading the property.
There’s no point in splurging $5,000 in remodels only to generate an extra $50 or $100. To avoid such a scenario, you need deep insights into the neighborhood and the target population. Is the region likely to attract people willing to pay the new asking prices?
See, people are conscious of the neighborhoods they live in and how much they are paying in rent. As a result, most people will move from a working-class area as soon as they can afford higher rents. If your asking price matches the rates in a more beautiful neighborhood, what would prompt people to stay in your property?
Carry out an in-depth background check
A steady source of income is among the most appealing feature of investing in commercial real estate. However, you need to fill up your units with high caliber clients to realize this goal. It calls for screening all your tenants to keep away the troublemakers.
The law skews in favor of the tenants, and unfortunately, some people thrive on exploiting these loopholes at your expense. Such tenants will readily violate the terms of the agreement and quickly rush to the court of law. They are known to tie up landlord in legal suits that last for years
A background check alerts you to such tenants and keeps them moving into your property. Like the proverbial bad penny, it’s excruciatingly expensive and painful to be rid of such tenants. There instances where landlords have spent a fortune fighting such tenants, all the while not collecting rent from them.
Keep the property in prime shape
Most tenants only want a beautiful place to call home, a place where they can look forward to escaping the world after a long day at the office. They take exception to damaged bathrooms, leaking pipes, and malfunctioning washers and dryers. Sparing them such unnecessary hassles prompts them to stay with you for longer, lowering your turnover rates.
Keeping your property in great shape has the added advantage of lowering the cost of maintenance. Neglecting small maintenance and repair needs often come back to haunt you. The tenants can opt to sue you for negligence saddling you with hefty fines and penalties. Or you could be faced with huge repair bills when the damages compound.
Commercial real estate is an excellent investment vehicle when looking for a steady return on investment. However, you need to pick your tenants carefully in addition to keeping the property in good shape to realize this objective. You will also require deep insights into the target market to keep the property full and the rental income steady.