Long term leases: Leases on residential properties tend to be for six to 12 months. If you buy commercial property, you can expect it to range anywhere from three to 10 years. You can then use the cash flow from this to improve your investment portfolio.
Higher rental returns: Although it's considered higher risk, commercial property usually provides higher rental returns. Add this to a long lease term and it ensures a stable and steady cash flow.
Absence of rates and outgoings: Unlike residential property, the tenant pays all outgoings such as maintenance costs, rates and corporate fees. This way, you're making a higher profit on the rent.
GST implications: When you buy commercial property, you'll have to pay Goods and Services Tax (GST). This may cost up to 10% of the purchase price. However, GST charged on the property's rent can be claimed back as an input tax credit.
Availability of smaller investments: Most residential properties are large and quite pricey. However, you have the option to invest in smaller, new or off-the-plan commercial suites. These are relatively low risk and you won't need a large deposit for them as well.