There’s a lot of controversy that goes around these days. No not the juicy bit. We’re not talking Hollywood here. Sorry to disappoint. But we do have to admit that commercial investment property suffers their fair share of debates, gossips and myths. Today, we separate facts from fallacy with the help of the following list.
Fallacy: “They’re primarily used for operations.”
Fact: Commercial investments can both be an asset and a product. Yes, you’ve read that right. They can be purchased in order to support a certain chain in operations (e.g. office space for administrative work or a retail space for front line work) but they too may be bought for the purpose of reselling or leasing. Say hi to the business of real estate.
Fallacy: “They’re expensive.”
Fact: Compared to a similar sized residential property, they may be priced higher but that does not necessarily make them expensive. Well at least not all of them. Given the right factors involved, commercial investments may not come cheap but the great deals are reasonably priced. What do we mean by this? To be reasonable means to be fairly priced as with consideration to current market values, supply, demand and other pertinent factors.
Fallacy: “These investments need to be city center.”
Fact: Not necessarily. Depending on the primary purpose and the audience for these commercial properties, they need not be in the heart of the city. However, a high level or adequate number of foot traffic, convenience and safety are still a must.
Fallacy: “Pricing them higher makes for better deals.”
Fact: Now many sellers think that to better sell or lease out their investments, they should price it higher in order to leave room for negotiations. This is a very prevalent misconception. Why? Simply because it drives buyers away. No investor will waste their time looking at an overpriced property so they’ll likely dismiss it at first sight. It’s crucial to know their value and be able to put the right digit that allows for profits without sacrificing demand.
Fallacy: “Surveys mean a passing or failing mark.”
Fact: Having commercial investments surveyed does not mean having it graded. A property survey is actually a professional and in-depth report that provides a detailed account about the assets for instance with regard to its current market value, useful life, depreciation, appreciation potential, previous uses and owners, condition, ongoing costs, and the like. These are often made by sellers to gauge an investment’s current standing and by buyers who wish to validate and look into matters more
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