Invest in commercial is more profitable

Upping your game: Residential to commercial properties

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In the vast field of investment options, property investment is traditionally perceived as safe and long-term. However, within this sphere itself, there exist two different worlds: residential and commercial property. While housing is a generally safe investment, wading into the commercial property market is a whole different ball game.One major reason why shifting from residential to commercial property is considered upping your game is that while investors are only allowed 70% financing for their 3rd home loan onwards, there are no such regulations for commercial properties; there are no policies to force lower financing margins whether it’s your 1st or 10th purchase. So, if you’ve gotten your feet wet with residential property investment, and are looking for your 3rd piece, shifting to the commercial property sector means that you wouldn’t have to deal with higher down payments. Let’s explore the other key differences from an investor’s point of view.

Risk & ReturnIn the residential world, demand and supply are the hero factors, whereas in commercial property, risk fluctuates in tandem with the Malaysian economy – worse conditions mean less purchasing power, leading to lower demand for retail spaces and ultimately lower property value and rental rates. However, the adage higher risks higher returns rings true here, as the lucrative prospects generally offset the gambles.

Less stress on tenant managementIn this area, commercial property investment comes out champion by a long shot. For residential property, furnishings and renovations are pretty much a necessity to rent out your unit in competitive areas. On the other hand, commercial property tenants prefer their units bare, as they usually want to design and renovate them to their liking.

Subsequently, tenant management is much easier, comparatively. Residential property owners often face problems of frequent complaints and runaway tenants leaving outstanding rent and utilities. Commercial property tenants, conversely, generally pose much less problems and are more likely to adhere to the terms of tenancy agreements.

Additionally, if your commercial unit is in a competitive area, tenants would be lining up should your existing one choose to terminate or not renew his tenancy, sparing you the hassle of finding new tenants. Finally, as tenancy periods for commercial units are longer compared to residential ones, you save on agent commissions.

A lucrative marketYes, in general, property prices have been surging recently, but in the commercial property sector, especially for prime areas, property value appreciation in general is much higher and faster. The reason for this is that for commercial property, rental rates have a direct and more relevant impact on property value, as opposed to the residential sector, where demand and supply play a bigger part.

Additionally, rental rates for prime commercial units shoot up substantially higher and faster than for residential units. It isn’t uncommon today for commercial units’ rental rates in busy areas to revolve around the tens of thousands, many times more than a residential piece of the same square footage in the same area. So, the benefit here is two-fold: higher property value and higher rental rates.

Financing your purchaseIf you have ever taken a home loan, you would know that banks in general aren’t particular about the type of property they’re financing, be it apartments or houses. But when it comes to commercial property loans, banks become hyper-selective about the type of property and may give you a lower margin of finance and/or shorter loan tenure based on the property type. If you do get offered a bum deal on a commercial property loan, shop around – different banks tend to like different types of commercial properties, so you might get a better deal at a different bank.

ConclusionTo sum it up, although you stand to gain more in the commercial property market as opposed to residential units, there are many caveats you should look out for, as factors like location, property type and economic conditions have much bigger impact on your investment.

Raw interior design

50 shades of concrete

Get unconventional! Incorporate raw finish for your interiors.

This simple powder room employs an industrial finish, resulting in an eco-effect without breaking the bank. ID and photo by INNOFLOOR.

Once home owners have purchased a property, the next step is to focus on its interior. It is common for property buyers enhance their homes with an array of finishing including wallpaper, paint, glass, mirrors and marble. The problem arises when one is on a budget.

A cost effective solution is to finish your home with concrete. Of late, this mixture of broken stone or gravel, sand, cement and water has not only helped home owners with keeping their budget in check but also give a calming and eco-friendly appearance to a home.

Adding to that, concrete is extremely versatile and can be matched with almost any material making it much easier with regards to matching with other furnishings when decorating.

The polished treatment applied onto this cement surface adds a sense of exclusivity to this semi-outdoor area. ID and photo by INNOFLOOR.

The trick to fashioning a more subtle appearance to concrete is to treat it. Some common ways of doing so would be to either to stain, polish or even engrave concrete for home or outdoor use as its original form may be a little too mundane for some.

For example, polymer-based staining using acrylics as well as epoxy can create a translucent look without disrupting the original look of concrete. When used on concrete, it works more like a transparent layer of protection that enhances the original unique appearance. This type of staining can be applied on interior flooring, walkways, pool decks, patios as well as driveways.

Treating concrete maintains its unique appearance yet keeping maintenance of the surface to a minimum. Photo by INNOFLOOR.

Polishing concrete involves grinding new or existing concrete floors mechanically to smoothen these surfaces. A sealant is also administered during the process for the concrete surface to achieve a glossy and uniform surface. This treatment method for concrete is durable, cost efficient, requires very little maintenance and can be administered within the interiors of a home and even commercial establishments. Aside that, it is also the cheapest way to turn a worn concrete surface into one that is visually appealing.

The next method is concrete staining, a treatment method that transforms concrete surfaces from drab to remarkable. Each outcome from the concrete staining process is unique as well as individual and home owners can rest assure that they have a masterpiece sprawled across their interior.

This concrete surface has been administered with both staining as well as engraving techniques, producing a unique look. Photo by INNOFLOOR.

A feature unique to the concrete staining process is that the raw material can be modified to replicate stone, marble and even wood surfaces by a using a method called texturing. Some home owners, instead or correcting the imperfections on their concrete surfaces, choose to highlight via staining, resulting in a surface that looks rustic.

To add more character to a treated concrete surface, home owners can opt to engrave. Concrete engraving is carried out to add aesthetic value to these surfaces by applying a wide range of designs, patterns and logos to add value and beauty to any home or establishment. Some popular patterns available via this process include, brick, flag stones, cobbles stones as well as tiling.

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