Investing in a commercial property can be a lucrative and profitable venture. Although commercial properties generally provide a higher yield than residential properties, its value is highly dependent on other factors such as zoning laws, location of the property, infrastructure, and other factors.
It is wise to plan in-depth market research and gauge the long term viability of the investment with your business goals before you seal the deal. Before you make your investment decision, it is critical to get an appraisal to judge the fair market value of the purchase. A New Jersey property appraiser can help you not only inspect the property, but conduct an in-depth investigation regarding rental information, replacement cost, demographics, lifestyle information, property records, and zoning laws. These figures are critical in determining the price of a commercial property.
Below are some of the key factors that dictate the price of your commercial property:
1) Location : The location of the property is arguably one of the most critical factors in your decision making. The success or failure of your business will hinge on your judgment in selecting the right location. Most corporate owners and renters will seek property that is located as close as possible to vendors, suppliers, clients, employees, and which maximizes exposure to potential customers. Proximity to markets, tax-exempt areas, warehouses, freeways, transport hubs, etc. will also play a crucial role to determine the price of your property.
2) Zoning laws: Not all commercial properties are zoned for identical purposes, as each property will often subject to precise plan approval, regulatory issues, and environmental impact assessment. With the help of New Jersey property appraiser, you can effortlessly research the allowable uses of your desired property.
For example, some commercial properties are zoned for only commercial office space or retail office space, while some are permitted only for industrial usage. Also, some commercial properties that are located in a historical preservation area will prohibit you from making any substantial changes to their facade.
3) Rental income: Another critical aspect that determines the value of the commercial property is the potential for rental income. If the commercial property is centrally located, it will attract more tenants, which will increase the price of the property. The ability to generate positive incomes will translate into a higher value for commercial properties.
4) Maintenance costs: An in-depth analysis and strategic knowledge of the property is crucial to demand a high price for the commercial property. Most properties have certain hidden costs pertaining to maintaining and running the property. Today, as we face challenging economic period, one must consider investing in a property with low maintenance rates.
Also, if the property demands high renovation costs, and cannot be occupied in a short period, then it can be costly to invest in such properties. As with most investment, time is money in the commercial real estate, and a vacant property which needs high renovation costs before moving in can prove to be a costly affair.
5) Future uses: The value of the commercial property will depend upon its possible future uses. In today’s uncertain economic times, businesses are threatened by potential slowdowns or closures. A property which offers a broad range of opportunities to fit the changing business dimensions will demand a higher value. Ensure that the property has ample space to expand if your business is growing, so you can add a second story or add more office space. However, if your business does not grow as per the plan, ensure that your property finds sufficient takers for leasing.
Commercial real estate investment offers an excellent value risk-return profile. Acquiring the services of Commercial Property Appraisal will enable investors to reap the benefits while mitigating the many risks of high-profile real estate investment.