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The pros and cons of commercial properties

By Greg Bell

Whether you're just getting started in commercial property investment or you already have an ever-growing portfolio, you need to know the positives and negatives of investing in commercial property, and more specifically, what those pros and cons may be for every specific building or piece of land.

Pro: More stability than residential

One of the big things you should keep in mind in commercial real estate is that the lease agreements tend to be rather long-term. National Property Buyers notes that in residential real estate, it's typical to see one-year leases, but that three years is more common in many commercial agreements.

Con: Potential for longer vacancy

On the other hand, it's worth noting that when your commercial property does have a vacancy, there's a possibility you could see it remain unoccupied for quite some time. Empty residential properties tend to be scooped up more quickly, and depending on a number of factors, that isn't always the case for commercial. You may need to crunch the numbers and determine if the trade-off of a longer lease outweighs the risk of longer vacancies, based on a number of factors.

Pro: Lower initial costs

Often, buying a residential property can be quite the costly undertaking, even if you're making a relatively small deposit, according to RealEstate.com.au. You may be able to find a commercial property that costs less, meaning there's a lower barrier to entry and you start getting a better proportional return on your investment sooner.

Con: Increased vulnerability to outside factors

Finally, it's worth noting that while you may maintain a great commercial property, vacancy can persist when some issues arise that are well beyond your control. For instance, economic downturns might mean you wait months or more to lease the space, versus what residential properties provide, because people always need somewhere to live.

When you want to accentuate the positives and get the most out of your ventures in commercial real estate, it helps to have the experts on your side. At Ray White Surfers Paradise, our team of experts can help you identify the perfect properties to suit your needs going forward, then guide you through every step of the sales process. Get in touch with us today to learn more about how we can help you based on your unique goals.

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