12 Nov Commercial property investment: a starter’s guide
Higher rental yields, longer leases and tax benefits are some of the many reasons commercial properties can make for appealing investments. But, as with any asset, there are risks.
Many investors are taking a closer look at commercial property investments as residential property yields moderate across the country.
So if you’ve taken the leap, or you’re thinking about entering the fray, Steadfast has put together a guide to insurance and risk management considerations.
1. Identify property risks
All commercial properties carry inherent fire, safety, theft and public liability risks, but your risk exposure may be higher if you purchase an older, unrenovated building.
An experienced insurance broker can help you identify risks on your property, as well as affordable risk mitigation solutions.
“To get a good insurance premium rate – let alone acceptance – you need quality control and detection systems within the property” says John Clark, Steadfast’s Broker Support Manager.
“For example, a sprinkler system or suppression system would be very good, rather than waiting for the fire brigade.”
2. Choose the right tenant
The tenants you choose also have a big impact on the risk to your investment, says Clark.
“If you have a tenant that’s got various flammable products inside the business, they will present a much higher risk to an insurance company than a business that’s storing bricks” Clark adds.
“To get a good insurance premium rate – let alone acceptance – you need quality control and detection systems within the property”