Investment in commercial property offers the opportunity for excellent returns when done right, but what constitutes a sound commercial property investment? There are various factors to consider, but here are three.
1. Understand the market
Any investment warrants significant research. As the German proverb goes, “Nothing should be done in a hurry except catching fleas.” The prudent investor takes time to understand the market they are investing in. On one hand there are the fundamentals like the tax implications, competition, demand, rent and so on, which will give you some sense of the likely return on the investment in the short term. On the other, you need to consider the area itself in terms of demographics and trends.
2. Know what you can afford
Considering the bond-repayment figure alone is a little like thinking that the only financial implication involved in acquiring a spouse is the wedding itself. Wise investors (and spouses) look at the full picture. Additional costs such as rates, levies, utilities, maintenance and security must be factored in. Bear in mind that the municipality may adjust the rates according to the sales price as you register the purchase of the property.
3. Consider ease of access
Even the greatest building can be rendered a dud if access becomes a problem. Consider issues like road infrastructure, availability of parking, future developments and their likely implication on traffic and the proximity of public transport.