When buying investment properties, most people tend to think about homes and apartments. But have you considered commercial property? It gets overlooked and it shouldn’t. There are plenty of perks to investing in commercial and we’ve put some of them together.
1. Most commercial properties have longer lease terms than residential
Your average lease agreement will last twelve months for a residential property. In commercial however, three to five years are common terms. This comes with reassurance and security, especially if you find tenants that you like. The longer term also means that predicting cash flow for the year is much easier.
2. Commercial properties bring in better cash flow
You can expect around a 1-4% annual return from residential properties. Commercial, however, can range from 5-9% and even double figures in some instances. This is especially true if you invest in a property that is a multi-tenanted (has numerous tenants in it). You’re likely to get a bigger return on investment from commercial properties too, which at the end of the day is what it’s all about.
3. Commercial real estate tenants pay for more outgoings than residential
As the owner of any residential investment property will tell you, paying for repairs and bills can become the bane of your existence. In commercial properties however, the tenant is responsible for more of these outgoings. Council rates, insurance, repairs and general maintenance are all on them, not you. It not only means that you’ll save money, but also that less of you time is taken up for managing the property.
4. Commercial property can mitigate risk
If a tenant stops paying rent in a residential property, then that’s it; your income is gone. In a multi unit commercial property however, you’ve got numerous tenants paying rent. This means if one of them stops paying you haven’t lost your entire rental income. The risk of losing that income and having to cover repayments solely from your own pocket is gone.
Thinking of investing in commercial real estate? Contact us to find out more information. We can guide you through the entire process and ensure that your money is spent wisely.