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Think Bigger: Using Equity to Buy Commercial Real Estate
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If you have equity in your home and are wondering what to do next, chances are you’ve thought about using it to buy a residential investment property.
But what happens when you want to take your property investment to the next level? There is another way to successfully grow your equity, set yourself up for retirement and see higher yields: commercial property investment.
Whether you're a seasoned investor or just beginning your financial journey, understanding the nuances between commercial and residential property can open up a world of opportunities.
In this episode, we'll explore:
Breaking Down Commercial Property Investment
Commercial properties have a potential for higher rental yields, making them pretty appealing. Imagine earning yields from 5% to over 10%; that’s starkly higher compared to the typical 5% yielding residential counterpart.
A commercial property lease also often covers most expenses; the tenants pay for water, rates, and even repairs—sometimes making it a more hands-off investment experience.
Who's Suited for Commercial Property Investment?
While residential properties offer a gateway to owning physical assets, their loans often come with easier terms—sometimes covering up to 95% of the purchase price. In contrast, commercial property requires heftier upfront investments, with deposits ranging from 20% to 40%. Utilising your property equity can bridge this financial gap, activating the power of otherwise dormant assets.
My Personal Commercial Property Journey
My husband John and I once invested extensively in residential properties across Queensland, a route initially taken to ease our tax burdens. But the constant management and cash flow constraints during sensitive life periods (like maternity leave) proved taxing. I share why the switch to commercial property in 2019 was a game changer for us.
Property investment, whether commercial or residential, is rife with complexities and rewards. It's vital to weigh the potential return against personal circumstances and market volatility.
If our discussion on commercial property has struck a chord with you, don't hesitate to reach out. Our team includes a buyer’s agent who would love to explore how commercial property might fit into your investment strategy.
Until next time, take care and enjoy your money management!
Links
Want to know more about commercial property? Join our commercial property mailing list here:
https://preview.mailerlite.io/preview/145360/emails/143452890515637989
Book a free 15 minute discovery call with Alissa: https://calendly.com/gtag
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