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Comercial or Residential
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strangefur
Posts: 1 Newbie
Hi All,
I've recently come into an inheritance and I'm looking into investing into property. I was looking for a bit of guidance as to whether to invest directly into commercial property (not funds) or a residential property.
The web seems to be full of differing opinions as to which is best so I was looking for some help here as well please.
I've recently come into an inheritance and I'm looking into investing into property. I was looking for a bit of guidance as to whether to invest directly into commercial property (not funds) or a residential property.
The web seems to be full of differing opinions as to which is best so I was looking for some help here as well please.
0
Comments
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Commercial property can have its advantages as the tenant is often responsible for internal maintenance, including decorating, the sanitary & kitchen equipment, often doors & windows etc. If you get a good company they can often stay for a long time as well, meaning fewer void periods and replacement tenant costs.
On the flip side, companies can go out of business very quickly, and your chances of getting any money back from bankrupt tenants/companies in liquidation can be dicey.
I wouldn't say either was better than the other, it will depend on the opportunities available in your area. For example, a commercial property just came up near me that looked good at face value - good net rental yield, good state of repair etc, but it was on a road where nearly all of the surrounding shops were what I'd class as risky trades (second hand shops, pop-up seasonal shops, tanning salon etc). The chances of those types of businesses being short-lived are high, so it looks far less attractive factoring in the increased chances of rent defaults & regular tenant replacements.
Another thing to think about is how familiar you are with commercial leases. They are very different to assured shorthold tenancies and you need to be up to date with the various different clauses and wording, or it's easy to make very costly mistakes.
Having said all that, I have a commercial tenant who has been in a property for over 12 years, pays rent on time every month, does all their own decorating & updating and are lovely people to have as tenants, so it can work out well. You just need to be aware of all the issues that might arise and weigh up all the pros and cons for your specific area.0
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