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5 Things To Keep In Mind When Investing In Commercial Property

5 Things To Keep In Mind When Investing In Commercial Property

When you consider making an investment in commercial property, there are a few things to keep in mind. You need to make an informed decision, so as to guarantee the very best returns on investment. In order to achieve this, you need to know what to be on the lookout for.

Let’s take a closer look at a few key points to consider when investing in commercial property for your business, or portfolio.

#1 Location, Location, Location

Certain areas enjoy greater demand than others that have been more affected by the economic downturn. It’s because of this that location has become more imperative than ever. Property values in metropolitan areas are more favourable as they’re seen to be more resilient to economic fluctuations.

#2 The Supply And Cost Of Utilities

Water and electricity, one a given in almost all formal properties across South Africa, now can’t be taken for granted. Carefully study the dependability of the supply, its costs and the availability of any backup systems that might be in place. It will pay to do so in the end.

#3 The Costs Of Ongoing Maintenance

It’s rather easy and alluring to underestimate the cost of maintenance. This is especially true in old buildings, which might be viewed as a bargain. Ensure you conduct an accurate survey of the state of repair in the building, as you might need to invest a large once-off amount for a proper renovation to get the building up to code.

#4 Affordability Of The Property

One of the most severe mistakes an inexperienced property investor can make is to fixate on the bond repayment alone. Don’t forge to take into account the rates, utilities, levies, security costs and maintenance of the building. These all need to be factored in, in order to arrive at the actual cost of owning and managing a commercial property.

#5 Approved Building Plans

Many investors still endure the misfortune of buying a property, only to be slapped with a demolition order shortly after, since the seller had built on the property without the required approval. It’s advisable, therefore, to request the approved building plans prior to buying the property.

Image courtesy of : R News

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