Planning to buy commercial property in Noida? In this article, we have summarized some important factors that can not be ignored when investing in commercial real estate.
Commercial real estate provides an attractive return on investment by creating multiple sources of income within the same category. In a thriving city like Noida, investing in the commercial segment contributes to a strong diversification of the investor portfolio. However, there are many things you need to know before investing in commercial real estate.
Factors before you buy commercial property in Noida!
1- Budget PLANNING–
Every real estate investment comes with a big capital and therefore requires careful planning. Do not start researching your property until you have the right budget that determines what type of property you can buy. Once you are sure of the locality, allocate your budget to the purchase. Put a buffer with at least a 30% on what you are planning, as there are always extra costs. This will help narrow down the commercial business opportunities available to you. In case you can not get the full investment amount, there are usually options for a small payment along with a mortgage for the remaining amount.
2- Property Location-
The most important aspect to consider is where your commercial property is located and how economically profitable the locality is. The location of your business is the most important aspect for its overall success. Both capital gains and rents are determined by the location of the property. The property should be situated in a safe, green and ideal area for your customers.
Investing in a developing area will be a plus point and give a higher return on investment than in an already developed area. While other factors may be compromised, the location factor should be a must in your decision making process. In addition, the area must be well connected so that travel is not a problem for your customers or employees.
3- Check the legalities-
If you are a newbie then it’s better to consult a property lawyer. A good lawyer will ease the litigation process and ensure that your commercial property is free of any legal issues. This is something you don’t want to deal with later. The tenant or buyer can renegotiate or evict you or even sue you if there is a dispute regarding your property. So, before you buy commercial property in Noida make sure that there are no legal consequences for your property.
4- Structure of lease-
Analysis of the rental structure can provide great benefits in the long run. There are also closing periods where tenants cannot leave the premises. Try to formulate a lease structure that works for you. The longer the lock-in period, the more stable your rental income source will be.
5- Additional Charges-
Generally these are the charges that are spent on the operation and maintenance of the property. Additional charges can drain your profits if you do not take them into account and allocate money in advance. These charges are often not mentioned directly, many people make the mistake of not including them in their budget plans and end up suffering. There are various types of hidden fees such as GST, parking fee, renovations, broker fee, preferred location fee, stamp duty and registration fee. These costs usually recommended to discussed in detail when concluding the contract.
6- Security deposit-
Security deposits for commercial leases are very loosely regulated. This way, owners can charge what they deem appropriate and use the deposit they deem appropriate (even charge interest on the payment). Requiring a deposit also a method used by landlords to cover the risk of a tenant not paying rent on time. If the tenant fails to pay rent, the landlord can deduct funds from the deposit to maintain income, at least for a short time.
In most cases, the deposit after you move out of the property is used to pay for any damages that may have occurred before a new tenant moves into the property. If the landlord uses the deposit to pay compensation after the end of the lease, they will give you a receipt.
7- Find ideal Tenants-
Once you have bought commercial property in Noida, now it’s time to get an ideal tenant. Find your ideal tenant by determining the location and budget of the property. Whoever you choose as your tenant can play a big role in increasing or decreasing the value of your property. Ideally, multinational companies can be good tenants because their presence in your property adds value. A good tenant not only pays rent on time, but also makes large deposits and is more likely to stay longer. A good tenant should have a healthy track record of on time payments, a positive credit report, and a stable source of income. They should have good references from past landlords, and there shouldn’t be any history of eviction or dangerous behavior.
8- Diversify your portfolio-
Commercial real estate is not free from risk and loss. However, investing in multiple properties in different localities can reduce income volatility, which means less risk. By diversifying your investment across different localities, you can take advantage of ups and downs in different markets and protect your money from a major correction in a particular market. If all your properties were in the same market and that market suffers a slowdown, your portfolio would suffer losses. Therefore, if you have enough funds, then try to diversify your investments.
Remember that there is no universal rule for investing in commercial real estate. You need to do proper market research before making a final decision. So in order to buy commercial property in Noida, you need to consider all the above factors.