Benefits of buying land in a commercial area

Benefits of buying land in a commercial area

It is common knowledge that acquiring real estate is one of the best investments you can make, since it is one of the few assets that increase in value over time.

Investments in Blue World City are as safe as buying land. In general, lots for residential purposes are better known, however, a land in a commercial area provides additional benefits that we will talk about in this article.

But before we start, we must define what a commercial area is and how it differs from a residential area.

What is a commercial zone?

We can define a commercial zone as the extension of land that is located in urbanized areas and whose purpose is to establish commercial businesses and promote the local economy.

An example of this are the small shopping malls that group together a certain number of businesses such as laundries, restaurants, convenience stores, stationery stores, among others.

It can also be a commercial center where there is a greater number of businesses, in addition to recreational activities.

Commercial zones are not something recent, since this concept arrived in Latin America during the 20th century.

Its origin dates back a few centuries in the rural communities of Ireland, spreading during the following years to the rest of the world.

The creation of commercial zones had its origin in the need to create jobs and boost trade. In this way they evolved to what we know today.

Benefits of land in commercial areas

Currently, large investors choose to purchase commercial land, since they generate greater benefits than residential ones.

In recent years, the Mexican southeast has been in the sights of foreign businessmen who are looking for investment land that will bring them secure profits in the medium and long term.

This is due to the fact that from 2018 there was a surge in investments in the real estate sector , generating excellent opportunities to acquire land at a good price, in addition to the fact that the advantages of investing in land even in times of crisis are still valid.

Based on this, we mention the main benefits of buying land in a commercial area:

1. Accessible investment

Acquiring land is more accessible than buying a residence, and in most cases, it is not necessary to resort to a mortgage loan.

You can buy commercial lots at a very good price and in comfortable monthly payments, ranging from 12 to 36 months, even longer if necessary.

If you have capital, allocating it to commercial land is the best option. In this way, instead of spending your money, you will be saving while acquiring an equity that will grow your initial investment with little effort.

2. Return on investment

When you acquire land for commercial purposes, the return on investment rises considerably. Not only because it is cheaper to buy land, but being in a commercial area increases its value unlike residential ones.

The return on investment is calculated based on the purchase conditions, the flow of money and the capital gain that is obtained. This data is what gives you the certainty that your purchase was a good investment.

In summary, it ensures the profitability of your investment in the medium or long term both in the ROI (Return on Investment) and in the ROE (Return on Equity), since the average growth of the investment rate in a land is between a 12% and 20% annually.

For the capital gain of your land to increase, it must meet certain conditions. For example:

  • Location in urbanized area.
  • Commercial and pedestrian flow.
  • The surrounding population and its purchasing power.
  • Price of nearby properties.
  • Maintenance and use provided to it.
  • Time and quality of materials (in case of construction).

The price and value of the property are different concepts, the value that the land can reach is what will allow you to obtain the return on investment.

3. Stability and security

As we mentioned, buying real estate is one of the safest investments you can make. In addition to protecting your finances and your future, it will guarantee you a constant source of income if you want to lease it.

Having a heritage on land not only gives you the peace of mind that your money is safe, but it also grows with each passing year.

Investing in real estate will give you the opportunity to build a network of properties, which can serve as collateral for other businesses or for retirement.

4. Price and additional costs

As we mentioned, it is clear that it is much more affordable to buy land than properties with construction. And not only that, the additional expenses are lower and most of them can be purchased monthly.

There are good opportunities to buy at competitive prices and it is even better when it comes to a pre-sale of land, since the savings are greater, which is reflected in the increase in future profits.

If you decide not to build, the expenses are almost nil, for example, the property tax is much lower compared to that of a building with construction.

As for maintenance costs, you will not have to worry, since the war of the land is non-existent.

5. It is ideal for any type of investor

The real estate market is friendly, which allows all types of investors to acquire land for business even without being too soaked in the subject of real estate.

Commercial lots are ideal for a first investor who wants to start their own business, for a small entrepreneur who wants to expand and even for large investors who want to expand their network of properties.

In addition to the above, acquiring a commercial lot prevents emotional attachment from being generated, and it is important to note this because the attachment that sometimes arises towards properties can cause certain and convenient deals not to be closed for you in the future.

6. Varieties of use

One thing that stops first-time investors is wondering what business to do on a vacant lot. To answer this, the main advantage that land in a commercial zone has is its variety of uses.

How is this? Depending on the type of commercial area, you can put a wide variety of businesses ranging from hairdressers, to convenience stores and even for residential use, for example a set of apartments for rent.

The advantages of this are many since you have a free letter to choose the type of business you want to start , or on the contrary, leave the land as it is to resell when necessary, which we will talk about later.

Another advantage is that you can know the type of business that the other lands will have as they are acquired, and in this way avoid their repetition.

7. Extra rental income

You can generate immediate profits with your land by leasing, either by traditional means or even renting it to franchises.

Acquiring land in a commercial area gives you several business opportunities, for example:

  • Leasing the land: If you have no plans to sell it in the short term or build on it, this is an excellent option. A large number of companies and businesses are always looking for a well-located space to expand, which is beneficial for you since you will not have to invest in construction and the land will be generating constant income while increasing its value over time. weather. Even if you decide to sell it at some point, the company that is leasing it might be interested in buying.
  • Build on the land: Another option is to build one or more premises, even make a small shopping plaza with which higher income would be generated with the rental costs. However, this implies a greater investment, extra effort and additional expenses such as taxes and maintenance.

Furthermore, if you take into account that land is a finite product —that is, you cannot produce more than what already exists— the demand for land with a privileged location in urbanized areas will increase and with it the opportunity to close a good deal.

8. Possibility of selling at a good price

If your land meets the requirements to generate added value, you can obtain an attractive profit in the medium or long term, since the value of the land increases as the area develops and grows.

For this to be successful, it is important to know the best time to sell, and this is achieved by observing the competition and prices in the current market.

The benefit of this is that in terms of land, competition is low, since most are focused on buying homes and are unaware of the advantages of land.

What should you keep in mind when buying commercial land?

Now that you know the advantages of commercial lots, we can mention that an additional one is the ease with which you can close the sale, however we will comment on the main factors that you must take into account so that your investment is safe.

  1. Research the reputation of the real estate company making the sale. It seems logical but sometimes it is easy to get carried away by promotions or prices, and although it is important, you must make sure that the seller is trustworthy and has experience in the field.
  • Check the location of the land. Most do not have terrain images because there is not much to show, however ensuring that the location complies with what is established is vitally important. Check that the flow of people is constant and its proximity to inhabited areas.
  • Check the legal status of the land in the Public Property Registry (RPP) to make sure everything is in order.
  • Confirm the commercial permits – land use of the land – and the type of business that you can set up in the area, for example, a liquor store would not be appropriate if there is a school nearby.
  • Keep up to date with the payment of taxes that corresponds to each party involved in the sale to have an accurate budget.

Differences between commercial land and residential land

When it comes to investing in land, you may wonder which is better, whether to buy a house or commercial land.

Among the main differences that exist between them – and that will help you make a decision – are:

1. Infrastructure

A home property can hardly be used for business, especially in residential areas where it is not allowed.

Commercial land can be residential or mixed use, which provides an advantage over what you can build and the use you want to give it.

2. Business opportunity

Homes have a higher level of competition and a higher level of effort is required to make a profit.

In the case of commercial lots, as we mentioned, the competition is much less, which makes buying and selling more accessible.

3. Maintenance expenses

A property generates constant expenses due to the wear and tear of the property, either due to use or the passage of time.

On the other hand, the wear on a land is non-existent so maintenance costs are almost nil.

4. Acquisition cost

A property intended for housing is ultimately more expensive and generally the payment has to be made in a single installment, unless the purchase is carried out through a mortgage loan.

Commercial lands are more accessible and do not require a bank loan since they have their own financing in much shorter periods of time.

Real estate in the Mexican southeast

As we mentioned at the beginning, real estate investment in the Mexican southeast is booming and thanks to this the opportunities to acquire good land at competitive prices are very high.

Among the cities that are emerging as the favorites of national and foreign investors are Mérida, Yucatán and Playa del Carmen, Quintana Roo.

Similarly, in recent years the opportunities to buy land in Cancun have been increasing.

The growth potential of both cities has exploded in recent years thanks to tourism and investment in infrastructure. This is why acquiring a land or investment lot is one of the best options.