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23 Dec 2016

RESIDENTIAL INVESTMENT vs COMMERCIAL INVESTMENT

The Australian dream is to own a house and for many Australians, they also own a residential investment property. Banks will lend up to 90% of the value of a residential property (subject to lending criteria) and vacancy rates are normally very low. More people prefer to purchase a residential investment property as the entry level is much less and very east to rent out.

With commercial investment properties, the purchase price is normally considerably higher than residential properties. The tenant will pay rent and all the outgoing,  i.e council rates, water etc. this is attractive because the landlord has no real cost to pay (except for land tax). The negative to purchasing a commercial property is that sometimes your property can remain vacant for some time, until you secure a tenant. Bank SA traditionally will lend you 60%-65% of the purchase price. This means you will be required to come up with a larger deposit when purchasing a commercial property as to oppose to residential property.

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