Benefits of Investing in a Commercial Property

By the resi financial blog team, 27 November 2014

Benefits of a commercial loan

Many investors are choosing to invest in commercial property as a way of generating returns and diversifying their portfolios, or as an alternative to paying rent on their business premises. What are the benefits and how does a commercial loan differ to a residential one?

Commercial property typically includes office space, retail premises such as shops and supermarkets, warehouses and hotels. In addition to diversifying your portfolio, owning commercial property also offers tax advantages.

But like any investment there are risks and investors need to carry out their own research and due diligence. While commercial real estate has many similarities to residential properties, there are also differences. For example, the net income received from commercial property tends to be higher as the tenants are usually fully responsible for all outgoings and insurance.

One of the key differences tends to be around the length of the lease. Residential leases tend to be for terms around six to 12 months, but commercial property landlords prefer longer leases as it reflects favourably on the property.

Remember too, that maintenance costs are likely to be much higher for a commercial property, especially if it has a lift or air-conditioning.

Most lenders offer loans for commercial properties and in most cases the features offered are very similar to those you would find for a home loan, such as free redraws. Just make sure you ask your lender to explain all the conditions and fees.

And while finding a commercial property might be easy, don’t forget to enlist the experts to help you through the process. Commercial property is not an asset you can buy and then sit back and forget about. Conditions change, especially economic ones, so ongoing monitoring is essential.

Resi is an award winning, market leading non-bank lender specialising in; home loans, commercial loans, investment loans and financial services. Resi is an Australian owned and operated lender with over 25 years’ experience dedicated to providing Australian’s with low cost, innovative product s to help them own their dream. Resi provides a full service operation that includes, local lending specialists, and an Australian based customer service team. For more information, visit www.resi.com.au

Categories: commercial, Commercial Loans