Commercial investment vs. residential | Global Capital Commercial Global Capital Commercial

Commercial investment vs. residential

December 16, 2019 / NEWS

Commercial investment vs. residential

Choosing the right investment for you means parting with your money now in the hopes you will see it grow before it comes back to you. However, when you work with the right financial partners, commercial investment doesn’t have to be a risk. Commercial loans in Australia can secure you a stronger position in the property market than residential investment. There are several important differences between commercial and residential investment you should know before you choose the right one for you.

Commercial loans in Australia

Commercial property can provide you with great cash flow from the property’s income with a gross rental yield of between 8% and 12%. However, you will see less capital growth than a residential investment.

Taking out a commercial loan will allow you to plan for a longer-term investment as commercial properties generally have three to 10-year leases. This makes them a more secure and reliable investment. You are also not responsible for the council rates, water rates or any corporate fees on a commercial property. Your commercial loan may also be easier to finance as a smaller deposit is required.

Residential investment

Alternatively, a residential property’s value can be more stable across different economic climates, whereas commercial property values can fluctuate if there is an economic downturn and a drop in demand. It is also generally easier to find residential tenants, whereas commercial tenants have to fit very specific needs so your property may be vacant for some time. Residential property values can be more stable over time. While it may go up and down, you won’t see the large fluctuations you can see in commercial property values through changes in supply and demand, surrounding properties and changes in the building’s infrastructure.

Commercial property investment is a unique way to grow your portfolio. However, as with any investment, there are risks involved. That is why it’s important to make sure that commercial investment aligns with your current situation and your plans for the future. If you want to find out more about commercial loans in Australia or discuss your options for commercial property investment, contact Global Capital now.

 

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