Investing in commercial property
Part Three - Our top buy to let tips
Whybrow's CEO, Ewan Dodds, gives us part three of his top tips for investing in commercial property.
Know your market
This may sound obvious but after 35 years’ experience as a Chartered Surveyor, I have seen numerous examples of where people have got it wrong. Something that looks too good to be true, often is too good to be true!
Only buy what you can afford.
Very few people are in the position of being able to buy through cash rather than via borrowing and, those that can will not usually offer the highest price. As a cash buyer, they will be in an exceptionally strong position and, increasingly we are finding in the current climate that one of the first questions raised by vendors to any offer is whether it is cash or mortgage. There are many ways to buy either via private treaty or by auction, the latter providing the excitement of buying “ in the room” and the transaction is then very quick. In such circumstances please be aware of the legal commitment this entails.
This should not deflect non cash purchases from pursing their dreams. The lending institutions will continue to lend to the right customer but increasingly at stronger LTV’s (Loan to Values) and at higher interest rates making the cost of borrowing that much more expensive. Under such circumstances, its essential that property assets reflect the cost of borrowing, so you must know what you are buying.
This may be in respect of its suitability as a home for the borrowers business or purely as an investment.
Look after your Tenants
Landlords, and especially institutional Landlords, are often seen as remote and not connected at all with their Tenants apart from securing rent from them, usually on a quarterly in advance basis. Keeping close to your Tenants though in the good times and creating strong relationships will help when the bad times come. During the Pandemic when indeed there were very bad times, the better landlords worked hard to keep their tenants, avoiding costly voids if the tenant was to depart or fail.
While developing a relationship with your Tenant, the landlord must remain strong. There may be occasions when a tenant does not pay rent on time and while there may be good reasons for this, any signs of weakness might be picked up and what could be a one of act of forgetfulness, then becomes a stream of non-payment, the costs of involving lawyers and court (small claims / county court) can be disproportionate and extremely expensive. A good tenant is worth their weight in gold.
Whybrow’s understanding of property and our skill in listening to clients is unrivalled in our market
We deliver a personal service to our clients which builds and strengthens lasting relationships Whybrow is an authentic organisation providing genuine openness to its clients We are a progressive firm of Chartered Surveyors who provide property consultancy and advice to national and regional businesses with a focus on the Eastern regions and London.