Residential v's Commercial
Residential Property as an InvestmentDid you know that residential rental property accounts for approximately 25 per cent of Australia's housing?
People will always require somewhere to live but won't always be able to afford to purchase property. If you're currently deciding whether investing in the residential property market is right for you, consider the following points.
Reasons to Invest in Residential Property
Investment property, whether residential or commercial, can offer strong capital growth and tax advantages through negative gearing. With the high demand for quality real estate in Australia, it's a valuable asset class.
- While the rental market may fluctuate, over the long term there will always be a demand for rental property.
- Choosing your residential investment wisely can result in strong capital growth as well as high rental returns.
- Favourable taxation conditions such as negative gearing can help reduce the costs of residential property investment.
- Property is a growth asset and it's usually possible to predict the property's resale value.
- Management of the property is straightforward providing it's in good condition and the tenants take care of it.
- The deposit required may be smaller than the deposit required for a commercial investment.
- The interest rate on loans for residential properties may be lower than those for commercial properties.
If you'd like to invest in residential property, knowledge of the property market and ability to identify sought-after properties are important starting points.
Commercial Property as an InvestmentAre you looking for a property investment that can offer strong returns, long term capital growth and a range of benefits?
Have you considered investing in commercial property - an office, retail outlet or serviced apartment?
Investing in commercial property can deliver many advantages compared with other forms of property investing. The main advantages are listed below.
Reasons to Invest in Commercial Property
The key to successful commercial property investment is choosing a well-appointed property in the right location, with access to all amenities and infrastructure, and at a realistic price.
- Commercial tenants may stay longer than residential tenants, as they're likely to enter into longer leases (3 years or more) to guarantee their business position and exposure.
- Your property is better protected from damage, because tenants have a vested interest in maintaining and respecting it.
- Clauses relating to tenants' maintenance and management of the property also provide greater protection.
- Tax deduction rates are higher on commercial property because of higher depreciation.
- Rent on commercial properties is generally reviewed annually and is usually increased either in line with the CPI or by 4%, whichever is greater.
Please note that Puzzle Finance is not an AFS Licence holder, and therefore cannot offer specific financial and investment advice. Information given here is general advice only and does not constitute financial or investment advice in any way..