Why Investing in Commercial Property can be Trouble for you?
When you’ve invested in a commercial property, it can bring you a lot of profits. Not just the profits, you don’t to spend on any furniture cost and the demand from tenants is always super-high. With so many advantages, there are downsides to it as well. These are some of the downsides or disadvantages of investing on a commercial property.
- Cost – Commercial property requires a lot of money to invest when compared to investing in a residential property. For the moment, the pace for the growth of residential property is low but it can still manage to catch up. The only way a commercial property generates a lot of income is based on the city and the location which can be tricky sometimes.
- Buying Process –The buying process isn’t just about the money that you have. It gets complicated due to the involvement of many parties which can become a mess for you.
- Economy – The economy of a country plays a massive role in commercial property’s fate. The demand goes down if the economy becomes weak. This makes it a challenge to earn maximum ROI.
- Tax – When you invest on a commercial property especially via bank loan, then you do not have any tax benefits. On the other hand, investing on residential property is better allowing you to enjoy more tax benefits.
- High Loan to Value Ratio Rate (LTV) –When buying a commercial property, you will end up spending more in the region of 60% of LTV. The LTVrate is obviously going to be dramatically lesser while investing in a residential property.
Don’t let these disadvantages hamper your opportunity in investing in a good commercial property. Take help from property lawyers in Perth and other parts of Australia.