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When businesses expand and relocate to a larger office, owners are often faced with the dilemma of choosing whether to sell their old space or to keep it as an investment. Before making a decision, it is important to weigh several factors to ensure the economic viability of selling or renting it out. Today's post will provide a brief overview of the factors to consider in the sale or rent out of a commercial space in Makati. With our help, deciding between the two options should be easier and more beneficial to your business.
1. Check the current value of the commercial space and weigh the risks.
If the current value of your space is higher than its original value: |
If the current value of your space is lower than its original value: |
Sell the property |
Sell the property |
Rent out the property |
Rent out the property |
2. Find out your investment yield.
Crunching the numbers is necessary to make sure that you choose the best option for your Makati commercial space. The first step is to use an accurate estimate (exact would be better) of the following:
- Expected monthly rent
- Annual taxes
- Other annual costs
- Monthly fees
- Likely sales price
- Estimated annual income
Using the following data, compute for the operating income. Afterwards, divide the operating income by the asset price (the price at which you bought the property). If this yield is lower than 5.7%, then it might be better to sell your commercial space.
3. Consult a real estate professional regarding local market trends, average rental rates, and the time it would take to find a qualified tenant.
Accurate real estate research is very important to help you maximize your investment and reduce the risk of losing money. An experienced real estate broker can give you updates on current rental rates in Makati, as well as a comprehensive analysis on the costs of being a landlord versus the profit potential of the property. He or she can give you a good estimate on the net profit or loss based on the value of your commercial space.
Looking to sell or rent out your property? Contact KMC Savills to talk to a qualified real estate broker and find out the best course of action for your business.