A commercial property portfolio can yield impressive returns, but real estate is associated with several weaknesses and risks you must compensate for. What are the best strategies for protecting your commercial property investment? And how do you implement them successfully?
Insurance
One of your first investments should be in commercial property insurance. Insurance is designed to afford you financial protection from a wide variety of threats.
- Property insurance. Most forms of basic property insurance can protect you against losses in the form of property damage, theft, and more. Just make sure to read your policy carefully so you have a thorough understanding of what’s covered and what isn’t. Every commercial property owner should have a property insurance policy in place.
- Liability insurance. You may also want to invest in liability insurance coverage, which protects you from liability issues you may face as the owner or manager of the property. If someone is hurt or their property is damaged because of how you managed the property, this policy can kick in to cover compensation, legal expenses, and more.
- Business interruption insurance. If you phone your commercial property as part of your business, it may also be wise to invest in business interruption insurance. Essentially, this insurance pays out if your business is interrupted because of an unforeseen development.
Security Improvements
You may also wish to protect your commercial property with heightened security improvements.
- Cameras. One of the easiest upgrades you can make is installing security cameras throughout your commercial property. Cameras function as a deterrent, keeping people honest, and they record footage so you can have prosecutorial evidence against anyone who commits a crime on your property.
- Alarms. You may also want to install alarms throughout your property. This way, if someone attempts to break in or if certain events unfold (like a fire breaking out), you’ll receive notice. Alarm systems may have secondary benefits as well, such as scaring off intruders or encouraging evacuation.
- Access controls. Secure commercial properties have at least some types of access controls in place. You should have total knowledge and control of everyone entering or leaving the building. Access cards and a security guard are a great place to start.
- Lighting. You can keep your perimeter more secure as well by installing better lighting outside.
Routine Maintenance
Routine maintenance can help you identify issues before they spiral out of control. In a commercial property, it’s much better to catch and fix a small issue before it becomes a major one; it saves both time and money. Make sure to have a thorough routine maintenance schedule in place, and try to prevent or fix issues proactively whenever possible.
Regular Inspections
Commercial building inspections are typically more expensive than residential expenses, but they’re still relatively affordable. At least once a year, commit to inspecting your commercial property, inside and out. It’s a great way to keep tabs on the condition of your property and bring attention to issues you may not have otherwise noticed.
Tenant Screening
If you rent the commercial property, make sure you screen your tenants thoroughly. Tenant screening ensures that all your tenants meet baseline requirements for renting your property, allowing you to filter out people who don’t have much business history or enough income to pay rent. It’s also a way to make sure your tenants treat your property appropriately, maintaining its condition responsibly.
Periodic Audits and Assessments
You may also want to conduct periodic audits and assessments to examine the value of your commercial property in context. Going beyond the scope of a routine property inspection, these assessments can take neighborhood and area variables into consideration. If you want to make sure your investment continues paying off, you need to understand its current position and how it might develop in the future.
Tax Planning
Tax planning is another important consideration for commercial property investors. You’ll need to accurately plan for taxes so you can pay them in full legal compliance. It’s also important to be strategic in your efforts so you can minimize your tax burden and increase your overall returns.
Portfolio Diversification
Finally, consider diversifying your portfolio. If you own many different types of real estate, and many different types of investments overall, you’ll be much less likely to suffer catastrophic losses in the event of a market collapse. This is also a great way to improve the consistency and nominal value of your returns.
As you can see, there are many strategies that can help you protect your commercial property investments, and most of them are relatively inexpensive and accessible. The more proactive you are in this process, and the more you guard your investments properly, the better your long-term results will be.
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