Allot of the questions in the forum are regarding residential property.
I read a book where the author prefers commercial properties for the following reasons:If selected correctly you need less commercial properties to achieve your goal eg :
To control $1 mill of residential property you may require 5 IP’s
To control $1 mill of commercial property you may require 1 IPWith residential property you deal with tenants directly .
With commercial property you deal with a contract.People who rent commercial properties tend to take care of the property as if they don’t it may impact on their business.
It seems to me that long term commercial property is the better option .
Does anyone prefer commercial properties ???I Guess it comes down to spreading the risk factor
I think I would rather have 10 x $1mill commercial properties,than 100 x $100K residential properties, but I would rather have 10 residential props than 1 commercial.Hope this makes sense!Commercial Properties are generally better yeilding and less hassle but if they are vacant it can take a lot longer to get the right tenant also their value is usually based on return so a drop in rent could possible lower the value. like all Investing make sure you can cover the worst case scenario!
Regards
garrytas[email protected] Always have cashflow positive Tasmanian commercial properties
availablesome argue that most individuals do not have enough leverage to buy decent commercial properties and are hence better of buying units in a commercial property trust. If your only asset is one commercial property and it sits vacnat for 1 or 2 years it could send you under.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Commercial props usually have greater +CF but less Capital as there tends to be less land value which appreciates.
…but a mixture of both is good.
Regards,
George.I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how
Good Points;
%return is usually higher
usually less complaints from tenants
tenants usually look after the property better, as their place of businessBad points
Most lenders only lend 65%of value on commercial + industrial
and you may have trouble getting cheaper residential loans with commercial mortgages.
if things go bad, you can always drop the rent 10 or 20 dollars to get another tenant, but that same amount of drop in commercial, makes no difference.
people have to live somewhere, they don’t have to have a business.Originally posted by investron:Bad points
Most lenders only lend 65%of value on commercial + industrial
and you may have trouble getting cheaper residential loans with commercial mortgages.
if things go bad, you can always drop the rent 10 or 20 dollars to get another tenant, but that same amount of drop in commercial, makes no difference.
people have to live somewhere, they don’t have to have a business.Investron
Thanks for the info I am always learning something .One strategy could be to purchase a number of residential IP’s , lets say 10 .
Assuming all went well you could sell 5 IP’s & purchase 1 commercial IP which will diversify your portfolio plus the administration overheads will be reduced.It all sounds ok until someone points out the cons which is a fantastic help….[specool]
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