5 important points to consider when buying a Commercial Property
Category Property Tips
If you are planning on investing in Commercial or Industrial properties, you should take note of the following points:
1. Upfront and ongoing costs
Depending on the VAT status of the seller, you may either be required to pay VAT or transfer duty on the purchase price. If you are a Vat Vendor Company, close corporation or a trust, you can claim the VAT/transfer duty back if the property is vacant. If there is a tenant, VAT can be zero rated and transfer duty does not apply. Other costs such as municipal rates and taxes should also be taken into account. Also note that levies need to be paid on sectional title properties.
Being situated in the right area is key. If you require access to highways, you should choose a property that has roads that allow you to get on the highway easily. If you require customers to come into your business, then being in a central area and having parking are key.
Never buy a property that is too big or too small. It is always a good idea to buy a property that has a bit of extra space to accommodate your business as you grow. You could also buy a large property and then subdivide and rent out a part, if allowed.
4. Area Zoning
It is also vital to get a property that is zoned correctly for your business. There are three types of Zoning. Commercial is suited for offices, Industrial for factories and retail for shops and retail outlets. You can apply to have a property rezoned but it comes at a cost.
Once you have bought a commercial or industrial property, the next step is to either use it or find a tenant. If it happens that you need to evict a tenant, it is easier to evict a tenant that is a close corporation, company or a trust than evicting a tenant in their personal name. The directors, members or trustees will need to give personal surety in order to sign the lease.
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