While most investors think residential when they consider property investment, there is a case for investing in the commercial property sector: offices, warehouses, factories, and retail spaces.
Often, the yields on commercial properties are higher. The average return on residential properties tends to sit currently at between 3-5%. For commercial properties it can be around 6-7%, or even higher in some cities. And, if you choose the location wisely you can also expect to see some capital growth over time.
The other benefit of a commercial property is that leases can be negotiated for lengthy periods and there are less ongoing expenses because unlike residential properties where landlords are liable for rates, water and body corporate, commercial tenants pay these outgoings for you.
Commercial property can be sensitive to economic conditions though and if you lose a tenant you can be long periods without a new one, which of course, devalues your property.
As with any investment, it pays to do some research and then let us help you work through the numbers so you understand all potential financial scenarios before making a commitment.
Commercial loans are different from mortgages for residential properties and attract a higher interest rate, and there are tax considerations which need to be factored in too. But commercial property investment can be a great addition to an existing property portfolio or a sensible way to get into the property market.
Keen to learn more? Call us and we’ll set a meeting at no cost to you.