Cons of Buying Commercial Property
Perhaps one of the biggest cons, and an unsurmountable hurdle for many, is the upfront cost of deciding to buy commercial premises. The deposit on a house for a person buying a normal house may be around the 10% mark, but it will be higher on commercial properties, and typically you may well be looking in approximately the region of 20 - 30%. There will also be many ongoing costs in order to pay for the maintenance of the building to consider.
One of the cons is the opposite of the pro: when prices rise, then it is a pro, and when they go down, it is a con. Particularly if the property in the region where you choose to buy falls significantly, then you are bearing the brunt directly of that loss in the way that if you are just renting then the rise and fall of the property's market value does not.
There are a large range of ways of structuring the repayments of a mortgage, but whilst there is not the risk of large rental increases, the payments can of course change significantly in value, depending on the deal in place. There is the potential for payments to go up considerably if interest rates move up, and if they move up quite a bit over a period of months, then of course repayments go up too.
It is often considered to reduce your flexibility as a company to buy property, so if you need to move location for instance, then it is relatively harder to do so in most cases than when renting, and of course the money that is in the bricks and mortars is in a sense 'stuck' there, whereas if you have a stockpile of cash and rent then the excess cash could potentially be used to pay for new staff or facilities when required.
More property related articles:
- Reasons to Remortgage
- Contents Insurance
- Finding out about building regulations
- Listed Properties
- New build property mortgages
