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commercial property v residential

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  • 07-11-2015 7:38pm
    #1
    grass_grower
    Banned (with Prison Access) Posts: 11 ✭


    so im faced with a choice

    buy one retail property with a yield of 8% or two apartments for the same money which also have an 8% yield

    im leaning towards the commercial as i think im less likely to encounter problems getting paid ( tenant is in a long term lease ) and it will be the job of the commercial tenant to maintain the property


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    #2
    L1011
    Registered Users Posts: 68,798 ✭✭✭✭L1011


    Commercial rental income has different tax treatment, commercial tenants are easier to evict in case of non payment and so on. Would always prefer commercial over residential in case of similar yield.


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    #3
    over_leveraged
    Banned (with Prison Access) Posts: 6 ✭over_leveraged


    L1011 wrote: »
    Commercial rental income has different tax treatment, commercial tenants are easier to evict in case of non payment and so on. Would always prefer commercial over residential in case of similar yield.

    at what yield would you consider a retail property unattractive

    im thinking anything below 8% myself as during recessions , everyone still needs a place to live but commercial property often is empty


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    #4
    gmgm.cool
    Registered Users Posts: 34 ✭gmgm.cool


    HI,
    Any updates on this post please. But in commercial property, will get long term lease, so no need to worry about it.


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    #5
    Claw Hammer
    Registered Users Posts: 6,236 ✭✭✭Claw Hammer


    With commercial property,a tenants business can fail. Court proceedings against a defaulting tenant can be lengthy and costly. In between tenants there can be long void periods. There can be rates payable on vacant premises. The landlord needs to be able to live without the rent as well as be able to afford outlays. Can be much better than residential when it goes well and much worse when it goes wrong.


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    #6
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭davo10


    I have both commercial and residential. Without knowing anything about your situation and the tenants, my advice would be unless you know what you are doing/letting yourself in for, avoid both. Residential tenancies are fraught with problems and high on risk, tenant rights are far stronger than landlord rights, evicting and errant tenant can be lengthy and very expensive. Also, if your apartments are in a RPZ the chances are as rates increase, your profit will decrease as you will be limited in how you can raise the rent. Commercial properties can be more profitable, but businesses fail, tenants stop paying rent and though commercial tenants are easier to remove, it is by no means easy. Also, there is a shortage of residential properties, but an abundance of empty commercial properties in most areas.


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    #7
    gmgm.cool
    Registered Users Posts: 34 ✭gmgm.cool


    Thanks for your reply.
    Thanks


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