Real Estate is considered to be one of the oldest and safest investment option. There are multiple strategies one can adopt as per their risk appetite and returns expectations. Below are the broad strategies to invest in commercial properties:
| S. N | Buy, Hold, Lease, Sell | Opportunities | Risks |
| 1 | Buy at the time of launch by the developer | Sell it whenever the price increases, till the completion of the project. Typically, price gets increased as the project construction progress | The developer may delay the project; hence the returns get impacted. Therefore, a developer’s reputation, financial backing, and history is important while investing at launch |
| 2 | Buy in resale during construction | Sell it whenever the price increases, till the completion of the project. Typically, price gets increased as the project construction progress | A bit safer than earlier one as the construction progress is visible. Though, still it may take longer time to complete the project |
| 3 | Buy at the time of completion | Hold and sell when the price increases | A safe option on the capital investments. However, monthly maintenance charges is an added cost to the investments |
| 4 | Buy and Lease it | Lease the property and enjoy the rental income | Depending on the stage of your purchase such as during launch, in between the construction, or on completion, the return on the investments (ROI) differs. The ROI keeps decreasing with the increase in the price of the property |
| 5 | Buy, Lease and sell it | Selling a leased property fetches better price as compare to a bareshell property | The preleased properties are often sell based on their ROI. The sale yield depends on various factors such as location of the project, location of the property in that project, tenant, 6terms of the lease. For Eg. Office that has open & unblocked view, with MNC tenant shall sell at lower yield fetching higher prices to the seller. |
| 6 | Buy Preleased Property | Don’t want headaches and lowest risks. Just buy a good preleased office space, enjoy a regular rental income. Building a chain of these assets will diversify the risks, increase the absolute regular income boosting the financial security for family as well. | Though the risk always remains if the tenant vacates the property and the maintenance charges needs to be paid. Thus, selecting a good property at reasonable price is critical for minimizing the risk. |
What are the sources of good properties?
- Primary / New launch: Developer. Reputed and delivery track record is critical
- Secondary / Resale: Individual sellers
- Distress / Auctioned: Individual sellers, financial institutions, developers
What is the best way to buy a property and manage the investments?
Though, an investor can find and buy a property itself saving the cost of brokerage, and manage the property on an ongoing basis saving management fee, there are certain benefits involving a “Right” broker. Let’s see the benefits:
- A right broker helps to manage the buyer and seller to arrive at a win win situation for both sides, thus ensuring a smooth transaction
- A right broker always assists in getting the right price for both buyer & seller
- A right broker will advise you correctly and saves your investment going waste
- A right broker is like a business partner that also assist in exit from the investment quickly. An important aspect of any investments
- If you have large pool of assets or do not live in the accessible location, it is advisable to hire a management company to take care of day to day requirements of properties and tenants. A right management company shall save you from lots of headaches, find a tenant, take care of the tenant and property. You can enjoy the returns.
