Diversifying your portfolio with commercial property

What are residential and commercial properties and what are their benefits?

Residential properties include dwellings such as apartments, townhouses and houses that are rented out to individuals or families to live in on a long-term basis. The residential lease may be on an ongoing month by month or year by year contract.

If your property is in a family-friendly neighbourhood or near a business hub, you’re likely to find a long-term occupant, meaning you will have a reliable source of monthly rental income. Plus, if you maintain your unit to a high standard, it is less likely that you will have a turnover of occupants.

Commercial properties such as hotel units and retail units, on the other hand, are leased to businesses that will use the space for a service.

In the case of a hotel investment, the unit is leased to the hotel owner or developer with a multi-year lease in place. The hotel operator is considered the tenant, and they will manage the unit bookings and maintenance for you. This means you’re guaranteed to have an established and reputable tenant and receive rental income for an extended period of time.

Additionally, the starting price for hotel units are much lower than residential homes. So if you’re just dipping your toes into property investment, or don’t have enough in the bank to buy a residential property, then a hotel unit is a great way to begin.