Becoming a commercial landlord unlocks several opportunities for maximising rental income. In addition to diversifying a burgeoning or established portfolio, investing in commercial property can help you achieve comparatively high returns in the short term and capital growth in the long term. The right commercial property also delivers a steady income during the years between initial investment and eventual sale.
As a leading commercial estate agency and property management specialist we make it our mission to help first time and experienced landlords reap all the rewards of commercial property investment. Serving Staffordshire, Cheshire and Shropshire, our commercial estate agency assists landlords with their property searches, development appraisals, commercial valuations, and building insurance assessments before catering to their property management needs on an ongoing basis.
Thanks to these commercial services and our experience serving this sector, our commercial estate agency has witnessed the rise of many commercial landlords from initial investment to future sale. But what does it take to become a successful commercial landlord?
In this blog post, we aim to answer that very question with our essential guide to becoming a commercial landlord.
Understand what it really takes to be a commercial landlord
As our commercial estate agency knows all too well, becoming a successful commercial landlord (and reaping those rewards mentioned above) is about so much more than having the capital to invest in the first place. You need the right temperament to be a commercial landlord and handle the property management that accompanies such an investment.
Getting professional support to identify a worthy investment that will serve you in the short and long term is a must. As well as finding a property type that’s suitable for and desirable to your target tenant, picking an investment that delivers on location is crucial when securing the viable income the commercial property market promises. What was desirable to the commercial tenants of previous years however may not be appropriate for today’s market.
Instead of the densely populated, high traffic areas popular with commercial tenants looking for office spaces and retail premises, the tenants of today favour properties away from the hustle and bustle. An area that offers the potential for increased footfall is no longer a priority for the vast majority of businesses. The shift to digital only and the onus of remote working has been accelerated by the impact of the Covid-19 pandemic and with this, the average commercial tenant’s needs have evolved.
Get clued up on the costs of commercial property investment
The steady income and mitigatable risk that accompanies commercial property investment comes at a cost. There are several costs associated with being a commercial landlord and these expenditures should be budgeted for appropriately to help you avoid any nasty surprises.
Many of the landlords our commercial estate agency works with choose to secure their properties using buy-to-let mortgages. Alongside the initial property purchase and associated fees, you’ll have monthly mortgage repayments to foot the bill for if you choose to build your commercial portfolio in this manner.Â
Whilst rent received from your tenant will more than cover this, being prepared should the worst happen and your property becomes vacant at short notice or over a longer period of time is critical. It is your responsibility to keep up with mortgage repayments, whether your commercial property is tenanted or not.
Obtain the support you need to manage your asset with care
Letting agency fees are another common commercial landlord cost. Delegating tasks like property marketing, tenant selection and credit check processing to a third party however is often money well spent for commercial landlords using their investment as a source of secondary income or those busy growing their property portfolios. There are also numerous legal fees and administrative charges incurred when devising tenancy agreements, registering for deposit protection schemes, managing your commercial property accounts, and obtaining the necessary compliance certification.
Remember, it is your responsibility to ensure the general upkeep of your commercial property. This includes but is not limited to the completion of safety checks, repairs and maintenance on a periodic and emergency basis. Our property management service offers a bespoke and comprehensive solution when taking care of your property and the tenant(s) within.
Our commercial estate agency always recommends taking out landlord insurance to protect your asset and your income. Being a commercial landlord can be time consuming too, whether calling on our property management services or not. This means the cost of your time should also be taken into account when budgeting realistically for your commercial property venture.
Fulfil your responsibilities as a commercial landlord
As a commercial landlord, you’ll fulfil a series of moral and legal obligations to take care of your property and the commercial tenants within. Our commercial estate agency suggests finding a reputable solicitor with commercial property experience to acquaint you with the latest legislation that will influence your role as a commercial landlord.
The safety of the tenants, leaseholders, employees and members of the public who utilise your commercial property should be top priorities, and current legislation reflects this. Whilst the exact laws applicable to your tenancy may vary depending on your lease, you’ll be responsible for meeting several requirements in the realm of health and safety at work, gas and electrical safety, fire safety, asbestos management, energy performance, and property maintenance.Â
As our commercial estate agency and property management specialists will advise, having the documentation in place to ensure your property’s regulatory compliance is important, with many certificates statutory. By law, commercial landlords need to provide tenants with an up-to-date energy performance certificate (EPC), and gas and electricity certificates amongst other documentation.Â
Your tenancy agreement is a clear way in which you can set out your rights and responsibilities as well as your tenant’s. We also recommend obtaining an independent inventory of the property’s fixtures and fittings to minimise disputes later down the line.
For further information and support when becoming a commercial landlord, please contact our commercial estate agency and property management experts today.
