Commercial property is considered high-risk for many investors. However, it is still a popular investment throughout Australia. Why do people keep investing despite it being a risk?
Benefits of investing in commercial property
Commercial property offers investors many benefits, including:
- Leases that last for years. Long-term leases allow investors to improve their portfolios because of more cash flow. Instead of searching for new tenants every six to 12 months, they search for tenants every three to 10 years.
- Commercial properties tend to provide higher rental incomes. When you combine higher rental revenues and three-year leases, you can have a steady, stable income.
- With commercial properties, the tenants are in charge of paying maintenance costs, outgoing rates or corporate fees, meaning you have a higher net rental profit.
- Commercial property is still subject to Goods and Services Taxes, which can be 10% of the purchase price in some situations. If this tax is charged on the rent, it can be claimed as a tax credit.
- Large commercial properties can be used as security on other smaller investments.
Financing Options
With commercial properties, there are various financing options available, depending on the strength of your application. Some lenders even offer specialised loan options, such as low doc, no doc, bad credit or lease doc.
Mortgage brokers are helpful if you are considering investing in commercial property. The brokers at Mortgage House are credit specialists. We can make applying for a commercial loan easier, approve you for a loan quicker and find you a loan that offers competitive interest rates. We can also help you understand any possible risks you may run into, helping you prepare and budget for your investment future.
