Why Commercial Property?
Long Term Tenants Guaranteed
The income derived from commercial property is relatively secure as the properties are let on long term contracts. These contracts or leases can typically be up to 20-25 years with upward rental reviews every five years, which ensures rental yields are kept high relative to current capital values. The key advantage of long term contracts is that void periods are kept to an absolute minimum.
And this leads to….
Secure Growth
Whereas the residential market is influenced by interest rate changes and people’s ability to borrow, the commercial sector is not influenced to the same extent by rate changes. The commercial sector is more aligned to the activities of companies (potential tenants) and their ability to keep up payments.
Higher Returns Achievable
In recent years, investment in commercial property has offered relatively high income for investors compared to investment in residential property. Yields of 6 - 15% are commonly available through investment in commercial property - rental yields which are becoming harder to come by with residential property in recent years. Investors who have recognised the benefits of residential buy-to-let are now beginning to realise that commercial properties such as offices and shops offer greater returns and a high income.
Over the last 10 years in the UK commercial property has been among the best performing asset classes - outweighing returns from gilts and equities by a significant margin.
Tax Breaks
You can sell commercial property at any time, either vacant or with tenants in place. If you own commercial property for more than two years and rent it out to a business, it qualifies for full business asset taper relief meaning that 75% of any capital gain is not taxable. Certain commercial deals (such as this one) are also pension and SIPP friendly.
Diversification
Whether you have invested in residential property, the stock market or another asset form, commercial property is the perfect way to diversify an investment portfolio. This is because it is not affected directly by any of the same factors that other assets classes are.
Well Established Market
The UK commercial property market has a well-established market structure and legal framework which allows for steady growth. The finance market is also beginning to catch up and offer support to the growth of the commercial market. Until recently, most lenders only offered 50% finance to investors looking to invest in commercial property. Now 70-90% finance is available to most investors, which has made the market much more accessible.
Hands-Off Approach
Despite popular belief from more traditional residential property investors, investment in commercial property can be a very hands-off approach. Tenants are typically responsible for fully repairing and insuring your property, which offers more protection for landlords than with residential property.
Tenants will often sign personal guarantees on smaller properties, making rents very secure. Letting agents also manage tenants and rental collection for landlords, which means that once any relevant paperwork has been undertaken, investment in commercial property is very much a hands-off experience for landlords.
http://www.buenoinvestments.com
Scott Goodall -
Scott co-founder of Bueno Investments, which was formed in 2005. Prior to this, Scott had been working in the property investment industry for many years where he built the foundations for the knowledge and experience he has today. Scott was fortunate to have worked with an excellent investor in his early years, which enabled him to learn the art of seeking out the few excellent opportunities on the market.
Within the company, Scott is primarily responsible for sales facilitation, business development and public relations.
In his spare time Scott enjoys spending time with family and friends, personal development events, playing sports with his favourites being tennis, football and golf, and he is a keen gardener. Scott also has a degree in Business & Finance Economics at Royal Holloway (University of London).
