{"id":4721,"date":"2020-10-30T13:52:03","date_gmt":"2020-10-30T08:22:03","guid":{"rendered":"https:\/\/www.aurobindorealty.com\/?p=4721"},"modified":"2026-03-26T03:43:33","modified_gmt":"2026-03-26T03:43:33","slug":"what-are-the-5-rules-of-commercial-real-estate","status":"publish","type":"post","link":"https:\/\/aurorealty.com\/blog\/what-are-the-5-rules-of-commercial-real-estate\/","title":{"rendered":"What Are The 5 Rules of Commercial Real Estate"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<label class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/label>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/aurorealty.com\/blog\/what-are-the-5-rules-of-commercial-real-estate\/#Just_consider_the_following\" >Just consider the following:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/aurorealty.com\/blog\/what-are-the-5-rules-of-commercial-real-estate\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><\/li><\/ul><\/nav><\/div>\n<div id=\"bsf_rt_marker\"><\/div><p>Are you interested in investing in commercial real estate? It is not as difficult as it appears. If you are following the principles of investing in the long term, you can actually earn much more than most of the debt instruments.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Just_consider_the_following\"><\/span>Just consider the following:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><strong>1. Location:<\/strong> Those commercial properties, which are situated in a better location, will always find a priority. You must be aware of the fact that the commercial properties yield returns in two ways-capital and rent appreciation. Both of these depend on the location of the property. It would help if you looked for those locations which have a vacancy rate of less than 5%. These high vacancy locations allow the tenants to renegotiate terms and conditions, as well as move easily.<\/p>\n<p><strong>2. Demand and Supply:<\/strong> Well, this factor is the determinant of almost everything we put our money in. An expert investor will always look into these things before investing. He will analyse much well before investing in commercial properties in Hyderabad. Even residential projects undergo a good amount of consideration, but somehow commercial projects undergo an arduous grilling process, as the investment is more. Every city has a different micro-market, and each of them has a stock and supply.<\/p>\n<p><strong>3. Quality:<\/strong> A location might have many buildings, but the one with the better quality will be rented or bought first. It will also receive a greater amount as rent or purchasing value. This is also a cyclic process, as investors will get a better amount from them, in the form of rents. He will also receive better tenant retention and higher appreciation of capital. The tenants from the foreign countries always pay a greater premium for the quality they get. These properties are also in demand as they can be sold off much quicker.<\/p>\n<p><b>4. Interior fit outs:<\/b> If you are an investor in a commercial property for sale, you should always try to gather as much information as you can about the interior fitouts of the place. Some tenants prefer doing their own interiors while others pay an extra amount to the developers for doing the same. If you belong to the second category, you should have better knowledge about the same, as you cannot afford a face loss, due to any discrepancy in them.<\/p>\n<p><strong>5. Lase structure:<\/strong> The lease structures in case of commercial properties differ from the residential ones. Mostly they follow the 3+3+3 or 5+5+5 lease period with an annual escalation. They are one-sided, as well. The tenant can move out anytime, but the landlord cannot ask them to vacate before the lease period is over. Before investing, as an investor, you should understand how the structuring of the lease period has taken place and what are the inherent risks, if any. It would help if you always opted for a longer lock-in period.<\/p>\n<p><strong>6. Diversification:<\/strong> As you are already an ace investor, you must be knowing that diversification of your portfolio reduces risks. This holds true, especially in terms of commercial real estate. If you invest all your money in a single property, you are vulnerable to huge risks. Be smart and invest in multiple properties, across cities.<\/p>\n\n\n\n\n<p><strong>Official Resources &#038; References:<\/strong> For verified information, visit <a href=\"https:\/\/rera.telangana.gov.in\/\" target=\"_blank\" rel=\"noopener nofollow\">RERA Telangana<\/a>, <a href=\"https:\/\/hmda.gov.in\/\" target=\"_blank\" rel=\"noopener nofollow\">HMDA<\/a>.<\/p>\n\n\n<div style=\"background: #f8fafb; border: 1px solid #e0e7ee; border-radius: 8px; padding: 18px 22px; margin: 28px 0 0;\">\n<p style=\"margin: 0 0 10px; font-weight: 700; font-size: 15px; color: #0f3460;\">Authoritative Sources Referenced<\/p>\n<ul style=\"margin: 0; padding-left: 20px; font-size: 14px; color: #444; line-height: 1.8;\">\n<li><a href=\"https:\/\/rera.telangana.gov.in\" target=\"_blank\" rel=\"noopener nofollow\">RERA Telangana<\/a> \u2014 Project registration verification<\/li>\n<li><a href=\"https:\/\/registration.telangana.gov.in\" target=\"_blank\" rel=\"noopener nofollow\">IGRS Telangana<\/a> \u2014 Property registration &amp; stamp duty data<\/li>\n<li><a href=\"https:\/\/residex.nhbonline.org.in\" target=\"_blank\" rel=\"noopener nofollow\">NHB RESIDEX<\/a> \u2014 Housing price index<\/li>\n<li><a href=\"https:\/\/rbi.org.in\" target=\"_blank\" rel=\"noopener nofollow\">Reserve Bank of India<\/a> \u2014 Home loan rates &amp; housing finance circulars<\/li>\n<li><a href=\"https:\/\/hmda.telangana.gov.in\" target=\"_blank\" rel=\"noopener nofollow\">HMDA Telangana<\/a> \u2014 Layout approvals &amp; master plan<\/li>\n<\/ul>\n<p style=\"margin: 10px 0 0; font-size: 12px; color: #999;\">Data verified by the Auro Realty Team as of March 2026.<\/p>\n<\/div>\n\n<h2><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-question-4721-0\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">What are the basic rules of commercial real estate investing?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>The five fundamental rules are: location drives value more than any other factor, always calculate net operating income before investing, maintain adequate cash reserves for vacancies and maintenance, diversify across property types and locations, and thoroughly research market conditions and tenant demand before committing capital.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-4721-1\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">How do you calculate ROI on commercial property?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Calculate ROI using the capitalization rate (cap rate) formula: Net Operating Income divided by property purchase price, multiplied by 100. For example, if annual rental income minus expenses is INR 6 lakhs on a property worth INR 1 crore, the cap rate is 6%. Include all costs like maintenance, taxes, and vacancy periods in your calculation.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-4721-2\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \">What is a good cap rate for commercial real estate in India?<\/h3>\n<div class=\"rank-math-answer \">\n\n<p>In India, a good cap rate for commercial real estate ranges from 6-9%. Prime locations in cities like Hyderabad&#8217;s IT corridor may have lower cap rates of 5-7% but offer better appreciation. Secondary locations can offer 8-10% cap rates with potentially higher risk. Compare cap rates within the same market for meaningful benchmarking.<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Are you interested in investing in commercial real estate? It is not as difficult as it appears. If you are following the principles of investing in the long term, you can actually earn much more than most of the debt instruments. Just consider the following: 1. Location: Those commercial properties, which are situated in a [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":4722,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[41],"tags":[],"class_list":["post-4721","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment"],"_links":{"self":[{"href":"https:\/\/aurorealty.com\/blog\/wp-json\/wp\/v2\/posts\/4721","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/aurorealty.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/aurorealty.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/aurorealty.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/aurorealty.com\/blog\/wp-json\/wp\/v2\/comments?post=4721"}],"version-history":[{"count":7,"href":"https:\/\/aurorealty.com\/blog\/wp-json\/wp\/v2\/posts\/4721\/revisions"}],"predecessor-version":[{"id":12209,"href":"https:\/\/aurorealty.com\/blog\/wp-json\/wp\/v2\/posts\/4721\/revisions\/12209"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/aurorealty.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/aurorealty.com\/blog\/wp-json\/wp\/v2\/media?parent=4721"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/aurorealty.com\/blog\/wp-json\/wp\/v2\/categories?post=4721"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/aurorealty.com\/blog\/wp-json\/wp\/v2\/tags?post=4721"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}