| Residential | Commercial | |
| Initial Capital | 10-20% deposit | 30-40% deposit |
| Rental Yields | 3-4% rental return | 5-12% |
| Lease Length | Year by Year | 5-20 years |
| Vacancy Periods | Short | Long |
| Lease Terms | Fixed Lease Term, fewer variations | Every Lease are different with huge variations |
| Rent Increases | No fixed annual increases | Fixed 3-4% annual increases |
| Maintenance and Repairs | Landlord responsible | Tenant responsible |
| Outgoings(Rates,Insurance,Tax) | Landlord responsible | Tenant responsible |
Should I invest in residential or commercial property?
Frankly, if you are a new property investor, most likely residential will be the first option since the risk associated and knowledge required are much lower, also less initial capital is needed for residential investment.
On the other hand, if you are an experienced property investor that already owns multiple residential investments, investing in Commercial property would make sense as this is a good way to increase your cash flow because of the higher rental yields, also you can diversify the investment portfolio and reducing the effects from a downturn residential cycle.
To keep it simple:
Residential investment – Lower risk, lower return
Commercial investment – High return, more risk associates
