Commercial Property For Sale In Johannesburg

Most investors feel comfortable with investing in residential property as they are familiar with it. Most of us have rented a property, and some of us have bought a house or unit, and understand what that experience entails.

commercial property for sale in Johannesburg, on the other hand, is a little more mysterious, but is an increasingly valid investment option for buyers of commercial property for sale in Johannesburg.

There’s a little more to commercial property for sale in Johannesburg, including terms and conditions of commercial leases, tax implications and who is responsible for the outgoings (expenses) of the building.

Here’s a break down of the key risks and factors to consider.

Types of Commercial Property For Sale In Johannesburg

Commercial property comes in three main types

• office – commercial property for sale in Johannesburg
• retail -commercial property for sale in Johannesburg
•  industrial -commercial property for sale in Johannesburg

Return On Commercial Property For Sale In Johannesburg

Residential property investment is relatively low risk and as a consequence, low return. Commercial property has a higher return, but this comes at a higher risk. For example, a flat or unit will average a return of 8%, whereas industrial property, such as a warehouse, may average 11%.

Commercial Property For Sale In Johannesburg Risk

When looking at commercial property for sale in Johannesburg it is important to consider the risks involed. The higher risk comes in the form of higher vacancy rates. Let’s use the warehouse example. It could take a while to find a new tenant for the warehouse, many months and possibly more than a year. Conversely, finding a new tenant for your residential property might only take weeks. Additionally, if the sole tenant of your property has to close due to tough economic conditions, you could face some hard times. On the other hand, residential property can be resilient when it comes to economic factors over the long term.

The higher risk comes in the form of higher vacancy rates.

Check The Duration of leases Of Commercial Property For Sale In Johannesburg

Residential leases tend to be for six or 12 months. However, commercial property for sale in Johannesburg leases are generally for a much longer period of time. It is not uncommon to have leases that are for an initial five-year period, with the option to renew for another five years.

Check The Quality of tenant In The Commercial Property For Sale In Johannesburg

The tenant is obviously a crucial part of your property investment. When looking at commercial property for sale in Johannesburg, a government or large corporate tenant is considered a ‘blue chip’ tenant. They are likely to rent your commercial property for a long period of time and are unlikely to default on the rent.

Commercial Property For Sale In Johannesburg Has A High Cost Of Entry

Buying commercial property for sale in Johannesburg is often much more expensive than buying residential property. CBD office or retail space is generally the most expensive space, due to its locality. Industrial property on the outskirts of the city can also be expensive due to size of the property being purchased. Costs, however, can minimised by purchasing smaller sectional title premises.

Consider Maintenance Costs Of Commercial Property For Sale In Johannesburg

Upgrading a residential property is relatively cheap. A paint job, new floor coverings, kitchen and bathroom can cost as little as R200 000 to R300000. Refurbishing commercial property for sale in Johannesburg, however, can be costly.

New air-conditioning, upgrading the building to meet new health and safety standards and refits may cost 100s or or even millions of Rands. Make sure you inspect the building properly or have an expert inspect the commercial property for sale in Johannesburg.

Commercial Property For Sale In Johannesburg Tax Deductables

One of the advantages of buying commercial property for sale in Johannesburg is that most of the expenses, such as council rates, insurance, repairs and maintenance are tax deductable.

This means that most of the expenses relating to the commercial property for sale in Johannesburg are deductable off your gross income. Unlike the situation with residential property where the owner uses the rent money to pay for rates, taxes, maintenance and repairs.

The lease of commercial property for sale in Johannesburg Is Important

This is the most important document in relation to commercial property for sale in Johannesburg. Unlike a residential lease which is commonly a standard document and about four pages long, ccommercial property for sale in Johannesburg leases are often 50 to 60 pages in length, are not standard documents and generally need a solicitor to draw them up.

Read the lease carefully and if you are unsure of anything, ask a legal professional to explain it to you.

Find the best commercial property for sale in Johannesburg at Commercial Panda