LAST WORD
Buying Commercial Property
Your top 5 tips
So , you have heard that buying and investing in Commercial & Industrial Property is a sure thing , but before you rush out there to buy up factories , office blocks and retail outlets , here are 5 important points to consider from Len Pears , Director of Quagga Property Buyers .
1 . Upfront and ongoing costs When buying an industrial or commercial property you will either have to pay VAT or transfer duty on the purchase price ; which you will have to pay is dependent upon the sellers VAT status . If , as the purchaser , you buy a vacant property into a Vat Vendor Company , Close Corporation or Trust , you can claim the VAT or transfer duty back from the Receiver of Revenue in your next VAT cycle . If you purchase the property with an existing tenant into a Vat Vendor Company , Close Corporation or Trust , the VAT , if applicable , can be zero rated and the transfer duty does not apply .
On an ongoing basis it is important to include municipal rates and taxes into your budget . If the property is part of a commercial and industrial sectional title complex you will also have to pay monthly levies .
2 . Location Convenience Locality to the majority of your customers is key , ensuring they are able to get to your premises easily . It is also important to consider easy access to major routes for dispatching products .
3 . Business Growth Potential This is an important point as it can affect you in many ways . We always advise clients not to buy premises that are either too big or too small , but to rather start out with just enough space for your current business needs , with room for between 20 & 30 % initial growth .
4 . Area Zoning It is important to buy a property that is zoned correctly for a business ’ s needs ; Commercial zoning for offices , Industrial zoning for factories and Retail zoning for shops and retail outlets . There are costs and other factors to consider when attempting to get a property rezoned .
5 . Avoid placing a tenant in their personal name
If you buy a commercial or industrial property for the purpose of investment , avoid placing a tenant in their personal name and rather ensure it is a Close Corporation , Company or Trust . For in the unlikely event that you need to evict them as a tenant it is a far easier process if they are a CC , Company or Trust than an individual person . When placing a CC , Company , or Trust as a tenant you must ensure that personal surety is given by the directors , members or trustees .
It is always important , especially more so with commercial and industrial property , to work with a qualified , proven agent , they will be able to help you navigate your way through purchasing the perfect property for your needs .
64 AUGUST 2017 SA Real Estate Investor www . reimag . co . za