THE PRO’S AND CON’S OF INVESTING IN COMMERCIAL VS RESIDENTIAL PROPERTY
THE PRO’S AND CON’S OF INVESTING IN COMMERCIAL VS RESIDENTIAL PROPERTY
When making the decision to invest in property it is important to decide if you want to invest in residential or commercial and industrial property. We spoke to Len Pears, Director of Quagga Property Brokers about the pros and cons of investing in commercial and industrial property versus residential property.
- In general, commercial and industrial properties offers better net rental returns than residential property, usually between 8.5 and 10%
- Most residential leases are only for a year at a time, whereas commercial and industrial leases are normally for between 3 to 5 years and the bigger units between 3 to 10 years. The leases include an annual escalation, which means that as a landlord you are not having to enter into negotiations every year allowing you peace of mind.
- Maintenance for commercial and industrial property works on a strict basis of - the landlord is responsible for all external maintenance and the tenant is responsible for all internal maintenance. In other words the tenant must hand the property back to the landlord in the exact same condition they received it in. It is important to remember that when placing a tenant to put in writing and photograph the handover condition of the property so that there can be no discrepancies at the end of the lease.
- Commercial and Industrial properties do not come with the emotional strings that residential properties entail as you are not dealing with a person’s home.
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.
For more information please contact Quagga Property Brokers on 021 712 8825 or visit www.quaggapropertybrokers.co.za