All Topics / Help Needed! / Commercial vs. Residential

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of SweetSweet
    Member
    @sweet
    Join Date: 2006
    Post Count: 63
    February 9, 2006 - 4:19 am

    Hi guys,

    In terms of investment property, which is better for a beginner, residential or commercial property? On realestate.com.au it is easier to find commerical properties that provide higher returns than say most residential properties, why is this?

    Also, as commercial property asks for prices into the millions, is it still easier to borrow this kind of money from a bank if you pay 10% on the deposit and all those other closing costs?

    Thanks all [headphone]

    Profile photo of shake-the-diseaseshake-the-disease
    Member
    @shake-the-disease
    Join Date: 2005
    Post Count: 97
    February 9, 2006 - 6:00 am
    Originally posted by Sweet:

    Hi guys,

    In terms of investment property, which is better for a beginner, residential or commercial property?

    Residential

    On realestate.com.au it is easier to find commerical properties that provide higher returns than say most residential properties, why is this?

    Higher return = higher risk.

    Also, as commercial property asks for prices into the millions, is it still easier to borrow this kind of money from a bank if you pay 10% on the deposit and all those other closing costs?

    No. Commercial finance is typcially 60 to 75% LVR and the rate is higher. This reflects the risk of the investment, banks are not dumb.

    There is no free lunch I’m afraid.

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891
    February 9, 2006 - 6:44 am

    For some great free info on commercial property have a look at http://www.gal.com.au

    Regards
    Alistair Perry

    Profile photo of SweetSweet
    Member
    @sweet
    Join Date: 2006
    Post Count: 63
    February 9, 2006 - 7:37 am

    yeh free lunches are what im afta, but thanks shake that makes perfect sense….and that site is fantastic, cheers

    Profile photo of mapleleafmapleleaf
    Member
    @mapleleaf
    Join Date: 2005
    Post Count: 51
    February 10, 2006 - 12:03 am

    My husband and I are also new at PI and asked the same question…Overall we want to mimimize risk and to secure our investments, so we have chosen residential as well.

    Commercial is great but there is a higher risk of long term vacancies and the money required upfront is greater (LVR 60-75%).

    So we have decided to maximize the money we have to buy several residential poroperties as a start and then to move onto commercial when we are more established. The reward of higher returns and a tenant that maintains a property is very appealing!

    Good luck,

    Mapleleaf

    Achieve the Dream!

    Profile photo of shake-the-diseaseshake-the-disease
    Member
    @shake-the-disease
    Join Date: 2005
    Post Count: 97
    February 10, 2006 - 1:01 am
    Originally posted by mapleleaf:

    So we have decided to maximize the money we have to buy several residential poroperties as a start and then to move onto commercial when we are more established.

    That’s a great approach. Build a wealth base in residential, then branch out into commercial or investing in a business.

    Profile photo of SweetSweet
    Member
    @sweet
    Join Date: 2006
    Post Count: 63
    February 10, 2006 - 3:34 am

    yeh i will definetly start off with residential, but like mapleleaf i will branch out into commercial property wen the time is right….cheers!

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