Are you mulling over the idea of buying a commercial property? This article sheds light on why doing so could be the best decision you ever made.
Commercial properties, as the name suggests, are properties that are used for the purposes of gaining revenue through business or other kinds of work. Normally, office complexes, shops, retail stores and factory spaces all qualify as commercial properties in India.
A commercial property has a different reservation in the city’s DP plan than a residential one. This means that you cannot operate commercial operations from a residential property, and vice versa.
The cost of a commercial property in India is generally much higher than residential properties. The area’s market rate determines the per square foot cost; in turn, the market rate is determined by the locality’s proximity to important commercial and recreational hubs, transport facilities, amenities in the area, etc.
How do you invest in a commercial property in India?
- You can buy the commercial property the same way you buy a residential property. You can pay then entire sum upfront, or take a commercial loan to pay for the purchase.
- The title and deed are transferred to your name once you pay the stamp duty and registration cost on the property.
- Once purchased, you are then free to use the space for your own commercial operations, or lease it out to another business or company for commercial use only.
- Leading housing and realty finance companies in India are offering attractive commercial property loans today. The rates of interest are competitive, though quite higher than those of home purchase loans.
- As with other property loans, your eligibility as a commercial property loan applicant matters when the lender wishes to approve your application.
Why buying a commercial property makes sound fiscal sense
A commercial property can provide you with years of stable income when you lease it out.
* Leases on commercial properties are normally made for a minimum period of 5 years and a maximum period of 10 years. However, you may make a long-term lease agreement at your discretion and with the proviso that sufficient notice will be given when asking the lessee to vacate the premises.
* Since commercial properties are more expensive to begin with, even their rental potential is correspondingly high. You can expect to get up to 10% more from a commercial property than from a residential property of the same size.
* You can also increase the rent on the property by at least 10% every year, based on market conditions and at your discretion.
* If you provide a lot of amenities on-site, such as pantry and dining space, well furnished restrooms, break room, Wi-Fi, etc. then you can charge a premium on the rent.
* The monthly rental income can help you repay the property loan that you take to buy the property in the first place.