Disadvantages of Investing In Commercial Real Estate


Taking investment decision in real estate is usually a difficult one, especially when it comes to choose between residential property and Commercial Property, Dallas. For someone who is new to investing in real estate, the decision is all the more difficult. It is usually perceived that investing in commercial real estate is for big investors and businessmen.
We take a look at some of the advantages and disadvantages of investing in commercial real estate:

Heavy Investment

There is an involvement of a heavy amount in case of Commercial Property, Dallas than in case of residential property. One must be prepared to invest a large amount after looking at his/her other financial needs and commitment.

Costlier Loans

The loans for Commercial Property, Dallas are higher than for residential property. The interest rates and terms & conditions will also depend on the kind of property, investors’ profile, location and the tenure of repayment.
The process of availing the loan is also more complex and the lender, which may be a bank or NBFC, takes longer in sanctioning the loan.

Fewer Tax Incentives

There are much fewer tax incentives for an investor of a Commercial Property, Dallas. There is no tax rebate or tax benefit on the EMI for repayment of loan for acquiring the Commercial Property, Dallas.
On the other hand, there are significant tax breaks for EMIs paid for residential property. This break brings the overall cost of acquiring a residential property down and is one of the major reason people prefer residential property.

More Road Bumps In Finding A Tenant

Finding the right kind of tenant for Commercial Property, Dallas like a shop or a showroom may be slightly difficult than finding a tenant for residential property. The property may remain vacant longer when one tenant moves out and another moves in due to the difficulty in finding a tenant.

Maintenance Woes

There is usually a larger expense in upkeep and maintenance of a Commercial Property, Dallas. In the case of a residential property, the maintenance expenses are limited to simple (tap repairs, minor electrical works, etc) fixtures and do not involve a huge cost.
The maintenance or renovation in a commercial set up will usually be huge. It is also important to note that a loan for renovation can be availed at the same rate of interest as the home loan if the two loans are being taken together.

Thorough Research Required

There needs to be thorough research by the investor as to what will be the overall cost in acquisition of the property, the taxes involved, the zonal laws and bylaws for renting out and the rental earning potential of that building or shop.
 Any mistake in any of these can prove to be really costly. The development of the entire area and potential of the rental to go up in future must also be kept in mind.



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