Commercial property is classified as any non-residential property that is used exclusively for business purposes. This includes retail properties, office buildings, shopping centres, hotels, warehouses, manufacturing facilities, apartment complexes and land for development. For many investors, acquiring commercial property is a big step forward, but one worth taking given the host of benefits that come with it.
Stronger Returns
In general, commercial properties tend to provide higher returns on investment than residential properties. Ultimately when you make an investment the main thing you want from it is a financial return. Higher returns on commercial properties make them an attractive alternative to residential properties.
Longer Leases
Commercial tenants usually lease the property for much longer than their residential counterparts. Some commercial leases can be up to 10 years whereas residential leases are usually just 6 months without a guarantee of renewal.
Stable Returns
Commercial properties are not as prone to fluctuation as investing in shares on the stock market or other forms of investment. When you invest in the right commercial property you can expect strong, consistent returns with low risk of drastic fluctuation.
Lower Ongoing Expenses
The tenants on a commercial property will generally cover the cost of things like council fees, water and insurance which results in less ongoing expenses than a residential property.
Rent That Keeps Up with Inflation
Most commercial lease agreements have fixed rent increases as part of the agreement. These increases are usually annual and are around 3-4% increases in rent which surpasses the 1.8% current rate of inflation per year.
Better Condition
Commercial tenants take better care of the property as it is used as a place for business and as a result, there is a level of presentation and professionalism that is maintained. Residential properties are people’s homes and can become quite messy due to children, pets and lifestyle over time.
As an investor, it isn’t always easy deciding where to invest your money and what type of investment you want. Investing in commercial property is a solid choice with strong returns.
If you’d like some help funding a commercial investment, get in touch with us today.