Commercial Property Portfolios: How to Build and Maintain Them
How to invest in commercial property and how property syndicate software can help
Have you been considering investing in property? If so, you probably have a number of questions and are wondering where to start. If you’re going to press forward, you’ll need to make a hundred different decisions regarding whether you want to invest in residential or commercial property, where to look for property and how many properties to invest in.
Developing a commercial property portfolio can be incredibly lucrative if you make the right decisions, make use of relevant property portfolio software, and have a clear set of distinct goals that you are working towards.
Why should you invest in commercial property?
There are important differences between investing in residential and commercial property, so you should know all the pertinent information beforehand. The commercial property market is primarily comprised of offices, warehouses and shops. Those who opt for commercial property are motivated in part by the portfolio diversification it offers, as well as the prospect of steady income.
On top of this, commercial property in the UK enjoys a long lease structure; the average lease length of a London office is between ten and fifteen years. This is significant when compared to the remainder of Europe. It is also markedly higher than the lease length of a residential property, which generally stretches from six months to a year.
Spread the risk with property syndicates
Property syndicates are a form of risk mitigation when it comes to investment. They offer an alternative to direct ownership. You pool your resources for investment in expensive real estate, which means that smaller investors are able to get involved in a larger project. As each investor is only one of several people involved, the risk is lessened. The worst case scenario is that you leave with nothing more than your initial investment — so you won’t make a loss. Bigger investors spread this risk even further by investing in a number of property syndicates.
Property syndicates are increasingly attractive to savvy investors, who are noticing the upward trend in the cost of commercial office space, and have also noted the increased returns. Given the large size of most commercial properties and the higher entry price, it can be difficult to invest directly. Syndicates allow investors to get a slice of the pie and unburden themselves of all the risk, which is particularly appealing to a novice investor.
Remember that, as with residential property, location is key. Do a significant amount of research into the market. Keep in mind issues such as the business operating in the commercial property; after all, if it is unsuccessful and goes out of business, you lose your income and it might become difficult to release the property.
How commercial property management software can help
For those investing in a property syndicate, property portfolio software can save you time, effort and money. Good software such as LogiPro offers accounting functionality, which is clearly an important factor to consider.
The software can track all receipts and expenses from suppliers and tenants. It can also distribute payments when necessary. It can easily and effectively calculate and automatically distribute payments due to each and every investor per quarter, along with the associated accounting reports. As well as this, the software can be used to manage contractor jobs and redistribute service charges. It can also be integrated with electronic banking to reconcile payment records and generate BACS files to be uploaded.
The usefulness of property management software doesn’t end with its accounting features. It can also assist with file and data management by centrally storing vital information for later use, making it available and accessible at any time, from any location. On top of this, good property syndicate software provides powerful document creation and distribution, thereby minimising administrative tasks.
Remember that if you find a dedicated team, such as ours at Logican, the software can be customised to suit your business needs.