When it comes to investing in a property, the commercial and residential are 2 of the most popular ones in the market. Investing in both are fine however, with little knowledge and experience, one can find it hard to choose between the two. Both have their pros and cons along with certain risks and factors involved. If you’re in the market, then understand these differences that will help you to invest in one of the 2 peacefully.
- Location – The number one thing to consider at first is the location. For a residential property, location does not play a huge role. However, the same cannot be said for commercial as genuine location is known to generate profit of around 10 to 15%. But if the commercial property is located in an under developed area, the owner will face huge loss.
- Consider your Loan – If you are going to take a loan from your bank, then it would be wise to invest in a residential property. One of the key reason behind this is the fact that banks offer around 80% of loans for residential property along with tax benefits. On the other hand, the bank usually offers only about 60% of loan on commercial property. Additionally, there are no tax benefits for a commercial property. Therefore, based on bank loan, residential property is the clear winner.
- ROI – Return of investment is higher when invested in a commercial property helping you to generate a profit of 10 to 15%. While residential property is known to offer 4 to 5% of ROI.
If you are looking to invest in a residential property in a city like Sydney, then make sure you hire property lawyers from Sydney.