5 Steps To Commercial Property Investment

Buy sell Property & Real Estate Investment Guide

Buying Property Tips#1: Choose the Right Location
Before you choose a location, it is of utmost importance that you consider the development prospect of the area. Other factors to consider here is crime record of the area, availability and nearness of public facilities and utilities.
Buying Property Tips#2: Study the Local Market Dynamics
It is important to get well familiar with the local realty market. Learn the variation in property prices by street. Don’t shy away from asking a few realty investment agents questions to get better insight on the matter.

The attraction of high investment returns lures many corporate South Africans into the hunt for viable commercial real estate opportunities. With the rate of development rising rapidly, South Africa is dotted with both ideal and adverse properties for sale. The trick to a successful property investment is the preparation. From asking the right questions to ensuring that your finances are in order, it is a process that simply cannot be rushed. To avoid disappointment, foreclosure or repossession, it is important to follow a formula that will ensure your success as an investor. Set out by Ken McElroy, Robert Kiyosaki's Rich Dad Real Estate Advisor, these 5 steps will assist in creating the ideal formula for your investment plan.

Understand the Type of Property You Want to Invest In

Commercial property ranges from office buildings to storage facilities. It is important to understand the framework of the property that you have chosen to invest in. Understand the parameters, the limitations and the opportunities. Take a detailed look into the plans, the renovations, the fittings and features. The last thing that you want is to face hazardous obstacles once you have already signed the deal.

Study the Geographic Area of Your Property

Take a look at the area in which you want to purchase commercial real estate. Is there opportunity for growth, are there potential competitors, is the area safe and secure? Research the neighbourhood in which you are looking to invest, concentrating on the existing infrastructure around the property.

Plot and Secure Your Financing Strategy

Buying Property Tips#3: Choose the Right Property
Getting the right property right away is quite unlikely. First, you need to be clear on why you want to buy an investment property. After that, you will be able to make right decision based on factors like remoteness or accessibility of the property.
Buying Property Tips#4: Do the Math Properly
Get a precise idea on the value of assets you have available. If you are investing in rental property, make sure you can easily cover the mortgage payment through rents. Additionally, get a clear idea on the appraisal value of the property beforehand.
Buying Property Tips#5: Consider Additional Expenses
When purchasing an investment property, it is not only the selling price that investors need to consider. There are various additional expenses such as property tax, home owner’s insurance, repair & maintenance that must be considered.

Before you decide on a commercial property, decide how you are going to pay for it. Are you going to request a loan or approach investors? Remember that you are responsible for the monthly payments. In most cases, personal items are used as surety when requesting a loan. Ensure that you can prove affordability and have a safety net in place if you cannot meet the monthly payments.

Rope Together a Dynamic Team

Investing in commercial real estate requires a team of professionals that are able to assist you along the way. This team should include an accountant, mortgage broker, lawyer and a property manager. These individuals will ensure that you meet the monthly requirements and will act as your biggest supporters when times get tough. Ensure that you are able to rope them together before you sign for the deal. Discuss your idea with them and get them involved so that they can offer the best possible advice.

Consider the Cost of Repairs

When investing in a commercial property, it is important to remember that you will need to take care of the repairs before you can open shop for business. Keep in mind that this maintenance needs to be kept up during the entire lifespan of your ownership as the value of your property is directly affected by the state of its interior. Ensure that the regular repair and maintenance requirements are minimal and can be attended to with the least amount of hassle.

By using these five points as a guideline, you will be able to establish a solid foundation on which to formulate your investment strategy. These points will ensure that you avoid disappointment and are able to get the best out of your investment. Take the next step and add a commercial property investment to your portfolio!

Investing in Commercial Real Estate

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5 Important Things You Must Know Before You Invest in Property

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Buying Property Tips#6: Inspect the Property
To ensure that you are getting everything you are paying for, a thorough inspection of the property is essential. Besides ensuring that you are not overpaying, a rigorous property inspection also gives you a good estimation on what the additional expenses might be.
Buying Property Tips#7: Pick the Right Financing Option
While interests on investment property loans are tax free, some borrowing costs aren’t immediately tax deductible. Knowing that, and structuring your financing in accordance is crucial. Don’t hesitate to ask for help from a financial advisor.
Buying Property Tips#8: Invest through Equity
One of the best ways to purchase an investment property is to leverage the equity of another property (including your primary home). This is a preferable way among regular investors, especially due to added tax deduction advantages.
Updated: March 29, 2018 — 11:35 am
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