Why your next investment should be a commercial property

Introduction:

Are you considering making a new property purchase? Buying a commercial property in Perth could end up providing you with a number of advantages.

It doesn’t matter if you’re choosing to buy property for your business or as an investment – purchasing commercial property can be a very savvy move.

In this week’s blog post, we are going to discuss the positives of investing in a commercial property, such as income, duration of lease, maintenance expenses, and tax benefits.

Read on if you want to understand why a commercial property might be the right choice for you and your portfolio.

Body:

Higher income

One of the many benefits of investing in a commercial property is the income potential it provides.

In comparison to residential properties, commercial properties generate more income. Residential properties income potential sits at three to five percent, while that of commercial properties is six to ten percent.

Furthermore, a more expensive rent is often anticipated due to the fact that tenants in commercial properties are businesses that are predicted to be able to pay such figures.

Lease length

Another benefit of investing in a commercial property is that of a greater duration of the lease.

Unlike residential leases, commercial property leases are most often for five years if not longer, and the minimum is three years.

This is great for landlords if the business is succeeding and well-located, as it provides you with a rental income for a number of years.

Maintenance expenses

A third benefit of buying a commercial, rather than residential, property is that the tenants must cover any maintenance expenses.

While in a traditional residential agreement, this is a responsibility of the landlord, it is not so in commercial leases.

In a commercial lease, tenants must cover renovation costs, repair and maintenance expenses, and any rates set by the council.

This means that commercial properties have a higher profit return and less repair expenses for the owner, allowing them to be positively geared.

Tax benefits

The last advantage of choosing a commercial property that will be discussed today is the benefit to your taxes.

As the property grows older, the building will depreciate in value.

It turns out that depreciation can be claimed as an ATO tax deduction if you are a commercial property owner and that property provides you with revenue.

Key points:

• You can potentially earn more with a commercial compared to residential investment property.
• A lease for a tenant in a commercial property is longer on average compared to residential leases, which can benefit you in the long run.
• Maintenance expenses are not your concern!
• Depreciation could become a potential tax deduction for you.

Conclusion:

Hopefully this article has helped to broaden your understanding of why a commercial property might be the right investment choice for you.

Remember – a commercial property offers a high income, increased lease terms, less maintenance expenses, and potential tax deductions for depreciation.

Ultimately, if you have any questions or concerns regarding investing in a commercial property, please get in touch with the friendly team at AA Finance Solutions.