Generally, the part time property investor naturally enough likes to purchase residential properties because they feel more at “home” in this market. The only problem I see at the moment is the fact that most new houses coming onto the market don’t really seem to reflect their true value. My query is twofold and is as follows –
(1) Does anyone think there will be a correction in the residential market resulting in either a drop in prices, or at least a levelling out? I know that this is a very complex question based upon many factors e.g. location, government policy, Loan rates etc.
(2) Does anyone think it’s time to get into the commercial market? Traditionally higher population densities have led to the need for more commercial, industrial properties.Has anyone got any views on this subject?
now Im no expert but if I had enought money I would buy commercial property.There are a number of advantages for investors. Generally longer leases, CPI increases built into leases.If you can afford to purchase close to a CBD values will rise as rapidly as house prices if not more, as more and more commercial/industrial property gets rezoned for housing.Vacancies could be scary tho if the buildings use is in any way specialised…would pay to check the average vacancy rate in any area you may be interested in.
Just my 2 cents worth, happy to be corrected
]Dino – Commercial would be a whole new ball game – wouldn’t it. But also, it is a tighter circle
You wil most likely find that investors that have a reasonable portfolio will have a mix of properties-houses, units, coommercial, industrial etc.
Loans for commercial/industrial have a lower LVR so you will need more up-front money. They can have their upside as explained above
I think it would be wise to at least look into these types of investment so as not to have all your eggs in one basket and to gain a broader outlook of what’s on offer.Veni, Vidi, Vici
Hi Escape
Sounds like wise advice. Thanks
There is another major difference that most residential investors fail to realise initially ( including myself ) and that is that interest rates ar higher on commercial loans. Typically 1% higher.
You usually can only borrow 70% although savvy clients with a good track record possibly could do better.The interest rate offered is often linked to the quality of the investment.
Commercial is a whole new ball game and needs serious research by the first time punter.MJK
]
The topic ‘Residential vs Commercial ???’ is closed to new replies.
