Regarding property type, buyers and investors have several possibilities when investing in commercial real estate. A warehouse property is one prospective investment that has a lot of advantages and a great profit potential.
Warehouses are used by businesses for storing items that would ultimately be delivered to the customers or clients. Meeting the need of a growing business or expanding it to a new area often requires a new warehouse. While some businesses buy their own to accommodate their products, some businesses choose to rent such properties. A warehouse at a good location with proper facilities is what businesses look for in a warehouse for rent sriracha (โกดังให้เช่า ศรีราชา, term in Thai). Buying a warehouse and renting it out businesses can also open the route of income.
Is purchasing a warehouse a wise financial move?
It is critical to weigh all the possible benefits and drawbacks before deciding to purchase a warehouse to make an educated choice.
The advantages of purchasing a warehouse outweigh the cons. Apart from being one of the most sought-after property types; warehouse properties are a subset of the ‘industrial’ property type and will remain so for years to come. First of all, just by their size, warehouses have a larger revenue potential. Landlords can demand a greater rent for larger spaces. Compared to other investment categories, warehousing is typically less volatile. Long-term tenancies typically result in more consistent revenue for the property owner.
Less duty, more revenue
Warehouses usually have high demand and incredibly low turnover, and the owner might end up with strong credit tenants willing to sign long-term leases depending on the size—but definitely with larger spaces. Additionally, triple net leases, which assign more duty to the tenant for property taxes, insurance, and maintenance, are typically used to rent warehouses. This arrangement relieves the landlord of some of these duties. Because the investment is so hands-off, the property owner is essentially getting passive revenue from a warehouse rental.
Purchasing a warehouse also has the added benefit of potentially appreciating over time, with little to no effort on the part of the owner to foster this appreciation. Since the warehouse’s value will have increased since the initial lease was signed, the landlord will typically be able to raise the rent when a warehouse’s lease expires. Due to the appreciation, the owner stands to gain more money should they decide to sell.
Tenant improvements
Improvements a tenant may have made to the warehouse to suit their business needs—as well as increased equity from the money being repaid into the loan are the causes for this gain in value. For example, it is possible that the previous renter added shelves or made storage space, which can now be included in any lease agreement with a new tenant. Warehouse properties have a track record of thriving in premium areas and enduring recessions.
Tax benefits
There is some tax benefits associated with warehouse ownership. Owners of real estate can deduct maintenance, repairs, mortgage interest, and any applicable depreciation. To be more accurate, an accountant can advise you on whether tax deductions apply to your circumstances.
