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Investing in Commercial vs Residential Property?

Investing your money, borrowed from the bank or otherwise, can be very daunting and an unfamiliar territory for a lot of people. When we invest we hope that we are making the right decision, didn’t over commit and that the leap of faith pays off.

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There are so many options to invest your hard earned money. We all can boost our Superannuation Funds or funnel it back into the bank, lock it away in an old fashioned “term deposit” only to gain a few pennies. Let’s face it the bank does not do much for you and your money today.

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Well there is another option, investing in real estate. It may seem unattainable for the “mum and dad investors” and a dream for anyone younger. But with the right advice and a little research you too can start investing in property.

Perth commercial builder

There are many pros and cons to property investment. A smart investment is one in which takes care of itself. Before you consider investing it would be wise to speak with professionals in the industry such as a business advisor or Accountant. There are many leading industry professionals that can assist you with the right type of investment. Click here to find a registered Tax Agent: https://www.tpb.gov.au/search-register

Let’s compare some of the pros and cons of Commercial and Residential real estate.

COMMERCIAL

PROS

  • Longer lease terms 3, 5 or 10 years
  • Tenant pays all outgoings
  • Average yield can between 8-12%
  • Bank guarantees of 6-12 mths rent

CONS

  • Unleased property will affect value
  • Economic conditions greatly affect demand
  • Takes longer to secure a commercial tenant
  • Changes in infrastructure or zoning can affect type of tenant you can secure

RESIDENTIAL

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PROS

  • Interest is tax deductable
  • Untenanted won’t drop value
  • Leverage your investment
  • Depreciation allowances

CONS

  • typically 12 month lease terms
  • higher risk of damage by tenants
  • increased interest rates may leave you needing to top up even after rent received
  • insurance costs

Today everyone is searching for the secret to success and retiring comfortably. Success isn’t given, it is earned and it is found in risks and taking that leap of faith. Successful people don’t sit back and dream, they go out and hustle until they own it.

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Go get your tree.

 

 

Further reading:

https://www.ato.gov.au/General/Property/Property-used-in-running-a-business/Commercial-residential-premises-and-GST/

http://www.australia.gov.au/information-and-services/family-and-community/housing-and-property

https://reiwa.com.au/