This week for our #tipoftheweek, our Commercial Fund Manager, David Hulston, takes you through some reasons why investing in Commercial Property is worth considering:
Higher Return on Investment: Commercial property generally provides a higher return on investment (ROI) compared to residential properties. Commercial Leases also contain a term for rent increases in accordance with inflation, which will further increase the ROI.
Value-added improvements : Long-term Commercial Tenants are likely to make improvements at their own cost to the structure and layout on a commercial property, which can increase the property’s value with no capital outlay from the owner.
Longer lease period: Commercial Tenants normally tend to stay in the premises for longer. A typical lease for a commercial property is 3-5 years, often with an option to renew, whereas the lease for a residential tenant is typically 12 months or even as low as 6 months with no guarantee of renewal.
Less ongoing expenses: The Commercial Tenants typically cover costs such as insurance, levies, council rates and water rates, so there are fewer ongoing costs compared to costs on a residential property.