Samuel brings James Sinclair along for a ride on this latest sit down. This discussion explores the pros and cons of both commercial and residential property. Solving various conceptions of which is more profitable which has the biggest risks.
The definition of commercial and residential property is quite simple, commercial focuses on office spaces, warehouses, and hotels. Residential properties are used for living purposes such as houses, apartments, and flats.
James is a master of commercial properties and believes that having a functioning trading business is vital in having a solid commercial property portfolio. Having a business first then investing that wealth into properties is more tax efficient and the route that should be taken.
Commercial properties are known for having better tenants especially if it’s a long-term leasehold say ten years. Tenants are more self-sufficient and are known for handling most issues themselves without the assistance of the landlords. They are also of a higher yield when in comparison to residential property.
Another avenue for more profit to be made working within commercial properties is by turning them into HMO’s. James explains how he purchased a warehouse for £140,000 that rents out for £35k a year. He converted this property into a having two lower units with three offices upstairs, he then concluded this by D rating the building taking away council tax and gaining small business rates relief which includes separating the business.
Similar to most business models there are a few flaws in commercial property it does take a bigger deposit in order to acquire a building and it isn’t as a straightforward as residential properties are.
Residential properties are an easier starter for first-time property investors. Samuel's crash courses and academies teach this as they are geared towards residential investing. They enable people to learn the ropes of the investing and what it takes to be successful. You can then take these skills into more advanced properties such as commercials.
Residential properties have a wider location reach as people want to live anywhere within the UK that could be small villages or big cities. A commercial property is most beneficial in busy towns where the business and trading is thriving.
To be a success in the property game if that be commercial or residential it will take you remaining teachable not letting deals that you conclude alter your mind set only allowing your mind to be changed by facts.