Three Good Reasons to Invest in Commercial Properties
The New Zealand real estate market is going uphill in a low-interest-rate environment for both residential and commercial properties. In a time when house prices are skyrocketing, more and more investors are looking at commercial properties as an investment opportunity for long-term and big returns. They offer several advantages over residential properties in terms of better upkeep and higher incomes in your portfolio.
Commercial property investment is very different from investing in residential properties. One needs to look at zoning laws, risk profiles, tax regulations, and return possibilities before investing in a commercial place. However, there are plenty of lenders ready to help and support investors with commercial property loans in New Zealand. It creates a strong investor interest and trust to drive the market upside.
Although there are several reasons to think twice before making an investment call, here’re some good reasons why investing in a commercial property can be a good bet for you.
Long-term investment
Commercial properties come with a lease agreement for a longer duration, which makes it a more profitable choice over residential properties. Over time, commercial properties are also bound to appreciate better given the growth and development in the neighborhood and local market. Commercial properties are a good choice to make a strong investment portfolio to accumulate wealth over the years.
Better income levels than average
Commercial properties perform better than residential rental properties in terms of returns. They have a higher income potential than any other real estate investment. According to a commercial housing market report, commercial properties provide an average ROI between 5 to 5.5 percent, whereas a residential rental property returns around 3 percent on the investment. Although these returns may vary on various factors, commercial properties provide a better average income to investors than any other rental property.
A plethora of options for ownership structure
Investors can choose from a plethora of options depending on the budget and ownership structure they want to possess. The New Zealand commercial property investment market allows investors to team up with other investors to get into the playfield with lower risk. There are mainly five types of commercial property ownership entities in New Zealand to give investors more flexibility:
- Individuals
- Companies
- Trusts
- Partnerships
- Syndicates
All commercial property ventures have different risk profiles, financial obligations, accountability, and tax regulations for long-term commitments.
In addition to these advantages, investors can get commercial property loans in New Zealand for a variety of investment opportunities to run a business. However, every commercial property has its financial obligations and investors need to conduct a proper assessment of property valuation, lease terms, exit strategy, and loan eligibility before making an investment decision. Commercial mortgage brokers at Mortgage Suite can help you through your commercial property loan assessment process to invest in the right investment property for long-term returns. Give us a call to discuss your requirements.