Are you interested in investing in Brisbane? If yes then you will be happy to know that plenty of investment opportunities are popping up in the Brisbane property market. These opportunities are available in both residential and commercial property markets. Being a potential property investor, you may find difficulties in selecting the right type of property for your long-run investment goals. Although both the properties have their own pros and cons; it is completely on you what will benefit you the most. If you are among those who are confused in choosing between residential and commercial property, then read out this blog post. Here, we cover the factors that will help you decide whether your next property investment will be commercial or residential.
Demand & Growth FactorsThe key driver for both the commercial and residential property growth is demand. While, the demand for residential property is driven by population growth, the commercial property demand is determined by both population growth and changing economic factors. This means the decision of choosing an investment property largely depends on its current as well as future demand. So, consider all the influential factors including the infrastructure developments, amenities and market growth before buying a commercial property in Brisbane. Tip: Understand these growth factors while deciding where and when to invest in Brisbane Property Market.
Risk LevelThe level of risk may vary between a residential and commercial property investment. For instance, sometimes commercial property can remain empty for longer periods of time than an apartment or residential unit. This could restrict you from generating cash flow for prolonged periods. In fact, the size of commercial space can also create a higher level of risk for you. Commercial properties that are large can be harder to lease and will cost you a lot more for its maintenance. However, commercial properties can provide some of the great benefits over the residential ones, such as:
- Longer leases
- High returns
- Allows you to recover a part of holding costs from tenants
Property MaintenanceProperty maintenance is one of those factors that need to be considered while investing your money in the property market, in both the commercial and residential. Before buying your investment property, make sure you know the responsibilities of landlords. For example, commercial landlords are completely responsible for the external maintenance of the property, while the tenants are responsible for the cleanliness and maintenance aspect inside the property. According to the lease agreement, the landlords have the right to hold back the bond money if the property is not cleaned or maintained. On the other hand, residential landlords are responsible for the maintenance of the property – both externally and internally.
Know Everything About CGTWhether you are investing in Kelvin Grove or West End, the CGT (Capital Gains Tax) on commercial properties work in the same way to residential ones except for the few changes:
- In residential property, your principal place of residence will be exempted from Capital Gains Tax, while the owner-occupied commercial property is not exempt from CGT.
- You can reap discount and offsets benefits available for certain types of commercial property owners dependent upon ownership structures and usages.
How to Take Final Decision?The decision of buying the right property in Brisbane for an investment purpose largely depends on your targeted goals and portfolio. If you are looking to expand and you want to generate higher cash flow, then the small commercial property can be a good investment for you. If you are looking for long-run investment, then buying a residential property in the hotspots of Brisbane can be an ideal decision for you. It is vital to look for top suburbs around Brisbane for a potential property investor before making a final property buying decision.
ConclusionIt is imperative for you to do deep-oriented due diligence and understand the benefits and risk involved in both the commercial and residential properties before signing any deal.