Residential and Commercial Property | Basic of Property Investment| Property Investment in Australia

September 16th, 2020

Hi, my friends. I want to talk about in this video regarding the comparison between a residential property and a commercial property. So a lot of investors come to us and they say. What’s the difference between a residential property and a commercial property? I will give you my opinion on how it works and what’s suitable can be suitable for some of the people. 

It depends on situation to situation, but as a new investor, when you’re brand new, you don’t know much about how property investment works. I think for me, my side of things, I think a residential property is better because it allows you to slowly get into the investment property market. You learn a lot of things and how it works and this and that. And there’s to an extent lesser risk and involved in terms of renting the place.

So as a newbie, I think you should try and do for the resident to go for residential property. but it also depends on your risk levels. How much risk can you take? You might be someone who might have a lot of cash flow coming in every month. So then even as a newbie, you can look into commercial property as well but if you are brand new and you don’t have much money coming in every month, or you don’t have much backed support to be able to sustain that commercial property, that it’s better to stick to residential properties, the finding of the tenants is very easy because there’s a lot of people wanting to rent into that kind of property. But when you look at a commercial property, normally they will have very good leases.

They might have 5 years, 10 years, 15, 20 years leases, which is fine. If you find something like that, that’s good. But for some reason, if they go on the weekend, they can go for a weekend for a long time. It can be  1 year, 2 years, it could be 6 months. So, and sometimes they might go, they can get rented straight away, but many times they will take time to be able to run because not all the businesses can use a similar kind of property. So for example, if you’re running like a butcher shop, it started not running a shop, you buying a butcher shop, but once that would just go, maybe not many butchers are going to come, or if you bought a KFC or something like that, not everyone can use that facility for their kind of business.

So you have to find a very specific kind of tenant that can rent that place for you. So if you don’t have a backup and you’re not sophisticated, I think you should stick to residential, but if you have the cash flow, you have the backup and you’re ready to go, then the commercial property might be also better. What are the advantages of commercial properties is you usually, they are very positive cash flow. So usually you’ll get leads of sort of yields of 6%, 6.5% and 7%, or it could be more, but the mortgage you might be paying is lesser than that. So it always is going to add money into your account and not, and the other big difference is most of the outgoings are paid by the tenant. Who’s renting the property in the residential property. The outgoings are usually paid by the landlord and the tenants pay for their rent and some utilities they use, but everything else is paid by the resident.

Sorry, the landlord. So that’s also a big difference to consider, but again, I would say commercial properties for maybe more sophisticated people who have a lot of money behind their sleeves, and they have a backup to sustain it in the event. There are no tenants for a longer period of time. So with that, we’ll sign off and if you have any questions in regards to that, just give me a call from his phone number (0433 213 993). And until next time I’ll see you again. Take care.Bye.