Buying Commercial Property

Buying Commercial Property

Whether investing in commercial property for the monthly income or for potential conversion into a residential development, the opportunities are vast and the benefits are interminable.
What type of commercial property are you looking for?
Leased property

Buying into this type of commercial property means you’ll receive income from day one of ownership.

Advantages

  • Let commercial property generally hold leases anywhere between 5-15 years. This is much longer than residential tenancies which vary from 6months to a year.
  • There is generally more government protection for the freeholder if tenants’ default on their rent. Commercial leases are contractual.
  • Stamp duty is commonly cheaper. This is something to consider when choosing your investment strategy.
  • Repair and maintenance costs are passed on to the in going tenants. Under most lease agreements the tenants are responsible for insuring and repairing.

Remember when investing into this type of property, to factor in the property management costs. If already let you can find these out with ease and may look to switch company in the future if the need arose.

Also, make sure you understand the market. What are the premises currently achieving? How does it compare to surrounding premises? What is the demand like in the area?

Commercial to Residential opportunities

This type of development investment is becoming more and more popular. There is huge value and profit to be made from these conversions so long as the numbers stack up and you do your due diligence.

We sell & acquire for clients

 Investment Properties

 HMO's

 Vacant Commercial Buildings

 Let Commercial Buildings

 Care Homes

 Retail Property

 Offices

 Development Land

 Unconsented Sites

 Consented Sites

Development opportunities
What should you look out for?

How central is the site? What surrounds the sites? How good is the accessibility from public transport and motorways?
This is one of the most important factors to consider when looking to develop a plot and working out if you can achieve your desired outcome.
Is there existing parking available? If not, ensure you have enough room to create parking to compliment the size of the build. If you are unsure you should contact the local planning authority.
As much as we would like to squeeze in as many units as possible, from boundary to boundary, to maximise the GDV, it is important to ensure there is sufficient space for an external communal area for the residents of the site. Also, as regulations change you must also consider electric points for cars as well as the usual refuse space, bike sheds etc.

Tips for investing in commercial to residential conversions

  • When looking for potential conversion sites, due diligence is everything.
  • Be realistic with your proposal. How achievable is the end goal with the number of units you are proposing?
  • Does what your proposing fit well with the surrounding area? For example, obtaining planning for a block of flats in the middle of a road full of bungalows may not be achievable.
  • Do have an indicative talk with the local council planners and an architect with your proposed plans and see how positive the response is to receive more of an insight into what is achievable.

The Commercial Property buying process

STEP 1

Find an adequate site that meets your specified criteria. Use the ‘What should you look out for,’ above to help guide you obtain an insight into viable site.

STEP 2

Once you have done your due diligence, it’s time for finding out just how achievable your proposed development is. Talk to the necessary people; the local council planning committee and your architect. They will provide you with the main answers you need.

STEP 3

Agree a sale. If the sale has been agreed on a conditional basis, both parties would have signed an option agreement. If the sale was unconditionally, an option agreement is unnecessary.

STEP 4

Instruct a solicitor. The agreement and heads of terms are now ready to be sent to an appointed solicitor. Your solicitor will usually send you, his or her terms of business, ask for your identification documents and any money on account, i.e., for property searches and land registry documents.

STEP 5

If you are buying unconditionally, then the process is now down to solicitors and you liaising with them. If you are buying ‘subject to…’ then now is the time to carry out the necessary in order for the sale to progress. This means applying for planning permission or a change of use agreement depending on the subject to contract.

STEP 6

Exchange of contracts. Once you and the seller have signed your respective parts of the sale documents, contracts will be exchanged and your solicitor will pay the seller’s solicitor the deposit. The sale is now legally binding and a completion date will be set. If you are financing, your solicitor will at this stage, request funds from your lender. If you are not financing(or the lending does not cover all sums due), your solicitor will request the balance of purchase monies from you.

STEP 7

At completion, the transfer deed (and mortgage) will be completed and the legal title in the property passes to you. Keys can then be collected.

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