Tips on investing in industrial property
Even though the property market appears to be slow at the moment, all real estate agents will continue to reassure investors and buyers that in the long-term, property does ultimately continue to appreciate, and that it is one of the most stable investments anyone can make. Whether you’re an entrepreneur looking for a permanent place to house your business or an investor looking at the merits of investing in property, consider the following before you embark on buying industrial property:
1. Do your research
Whether you’re investing in industrial property for your own business or looking to rent it out for a profit, research the location of the property. You don’t want to invest where people don’t want to work, so avoid places where there is high crime, poor infrastructure, or too long a drive away from any other amenities like shops, petrol stations and residential locations. Make sure the building(s) you are interested in isn’t falling apart – everything on site needs to be in working order, or at least repairable at a low cost.
Drive around the area you are interested in, talk to other owners and tenants about the resources available – for instance, are there frequent cuts in electricity and water supply? When you have an idea of where you want to invest, contact the relevant industrial property brokers (preferably more than two or three) and negotiate your needs with them.
2. Assess your financial situation
Contact a bank or financier to determine how much you are able to invest and to advise you on how to go about it. Don’t try to draw up documents and contracts on your own – this is a complex investment to make, so involve the relevant lawyers and accountants and get them to correctly draft a well-structured offer to purchase; one that has your circumstances and best interests at its core.
3. Make a negotiable offer
By now you should have shortlisted two or three properties you’d be willing to invest in. Use them as a comparison against each other and make a decision on which is the best option. Once you’ve decided on the option that suits you best, make an offer and negotiate until you’ve closed the sale.
4. Important factors to consider throughout the investment process
Do not assume that everyone you’re dealing with is competent and process-orientated. Insist on seeing the title deeds, the municipal valuation, a description of the land from a legal body, the documents from town planning and the zoning certificate, etc. If there are current tenants occupying the building, make sure you obtain comprehensive copies of their leases.
Before you invest, be sure to make a proper expense analysis to see all the costs you will need to cover and also set aside money for emergency maintenance and repairs.
There are different ways in which you can invest in industrial property, and the financing process is very different to financing a residential property. Don’t give up if it all becomes too tedious – the investment may prove to be very lucrative and worth your while.
Hopefully this article has made a good argument to the reader pointing out that when thinking about investing in property, you have more choice in possible investments than simply checking out the property for sale in Hermanus. Industrial investment may be for you.