Is it good to buy commercial property?

Short answer

Commercial property can be a good buy if you want rental income, have the capital, and can wait for the right tenant or buy a property that already has one. It is a poor buy if you need the money soon, cannot afford empty months, or have not checked the location and the tenant demand.

Whether it is good depends on your goal, your budget and your time, not on a rule that holds for everyone.

Why people buy commercial property

• Rent from a business tenant
• Possible rise in value over the long term, which is not guaranteed
• A space you can use for your own business
• Tenants usually sign longer leases than home tenants

The risks

• The space can stay empty between tenants
• Large capital is tied up and is hard to take out quickly
• The location or the market can weaken
• Rent depends on the tenant's business
• Repairs and tax rest with the owner

Costs people forget

• Stamp duty and registration
• Brokerage and legal fees
• Property tax and maintenance
• Months without rent
• Tax on the rental income, which you should ask a chartered accountant about

If the property is for your own business

Compare the cost of owning with the cost of renting the same space for the years you plan to stay. Owning ties up capital and brings repairs and taxes. Renting keeps capital free and the space can be changed as the business grows.

A lower-effort route

A pre-leased commercial property already has a tenant, so rent starts at once. The risks move to the tenant and the lease, which you can check before you buy. See what pre-leased means and whether it is a good buy. For leasing a space, see commercial property leasing in Ahmedabad.

This page is general information. It is not legal, tax or investment advice. Check the documents of any property with your own lawyer and chartered accountant.

Related

• Is it good to buy pre-leased property?
• Commercial property leasing in Ahmedabad
• Pre-leased property in Ahmedabad
• Contact and office location