Make Money Renting Property To Businesses
Friday, June 4th, 2010 at
11:19 pm
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If you’ve got money to invest in property, there’s more than one option open to you.
You mostly hear about people buying a house, doing it up and then selling it on or renting it out.
But you could also do the same with property abroad. Or an increasingly popular way to make money is by renting property to businesses.
New research by lenders Mortgage Trust shows more than one in four landlords are looking to get into corporate rents, which includes commercial buildings as well as leasing domestic properties to executives who have moved from other parts of the UK.
At the start of 2007, that figure was just 14 per cent according to its research. Now it stands at 27%.
Much of this growing interest is because you can make more money renting property in this way, especially if you can afford to buy a commercial building.
Businesses tend to demand high standards. And if you can provide, they will pay handsomely for it.
On top of higher rents, a company is much more likely to stay in a building for a longer period of time. If you think how much hassle it is for you to move house, it’s ten times the pain for a business.
When your tenant does move, they are less likely to do a runner than people renting property might do, leaving you with a mess to sort out. This is true for domestic as well as commercial rents. And businesses are more likely to put the building back to the state it was when they moved in.
Some landlords hope that down the line they can sell their investment property to the tenants.
If you are interested in buying a commercial building as an investment, you need to approach it a little differently to when you are renting property domestically.
First off you must look very carefully at the location of your potential investment, and consider the type of business that might rent it from you.
Companies that use warehousing will need excellent transport links, plus lots of cheap space. Whereas a business that has lots of staff and clients visiting the premises will be more interested in a smart looking building and plenty of parking spaces.
The trick is to find a balance between the likely cost of the premises, the features of the building and the location.
Next up you should look at the infrastructure on offer. A building will have more appeal if it has modern network cabling in place, plus a good security system. The building should already have smoke detectors and other safety features such as fire extinguishers, as these are required by law.
One smart tip that will help you maximize your profits from renting property to businesses is to look at how you can make better use of the space you have bought. For example, if you have a tall building, could you install a mezzanine floor to double the floor space available?
Is there wasted space in the loft or associated outbuildings that can be converted? The more floor space you have, the more monthly rent you will get.
It will be harder to do this work if you buy the building with tenants already in. If the building is empty it will be easier, plus you can throw the cost of improvements into any borrowing you are doing to fund the purchase price.
Finally, before you shell out for your building, find a commercial estate agent you trust to work with you as a partner. Not only will they offer plenty of advice on the best way to get a good monthly income from the building, but they may act as a property finder for other businesses – matching renters with tenants.
This could be a powerful weapon for you in marketing your new commercial building, and getting tenants renting property quickly.
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