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Residential SMSF Property Investment VS Commercial SMSF Property Investment

Property investment is undoubtedly a lucrative addition to an investment portfolio and can place individuals and families on a path to generational wealth.

Property investment is generally classified into two categories, residential and commercial property investment.

While these two methods of property investment can be fruitful, they are different from property investment options inside your super.

So sit back, relax and learn more about residential SMSF property investment and commercial SMSF property investment as the two heavyweights of property investment go toe to toe in our comparative blog.

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Commercial SMSF Property Investment

While commercial SMSF property investment is indeed a beneficial option for SMSF investors as it allows for control, flexibility, capital appreciation and tax-effective leasing just to name a few advantages, there are however disadvantages.

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Reliance On The Economy

Commercial SMSF property investment can be extremely volatile as success depends on how well the individual business thrives and if the economy is at 100% operating capacity.

For example, in times of dire economic stress, such as COVID-19, commercial properties undoubtedly take a nose dive, therefore, impacting the ability of commercial SMSF property investments to generate passive income for members.

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Potential For Longer Vacancy Periods

Last year it was reported that vacancy rates had reached a three-decade high, increasing by 20 basis points.

Therefore vacancy periods in the modern age will tend to be much longer due to society's shift to working-from-home employment opportunities.

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Residential SMSF Property Investment

On the other hand, residential SMFS property investment with Supavest makes it possible to investment in brand new house and land builds, an option previously not made possible inside an SMSF.

Stay tuned for our reasons explaining why residential SMSF property investment might be for you.

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Resilience To The Economy

Residential SMSF property investment is fairly resilient to the impacts of the economy due solely to the fact that people will always need a place to live.

House/apartment hunters are always on the lookout for improved living opportunities, regardless of where the economy is heading.

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Shorter Vacancy Rates

Vacancy rates for rentals are at an all-time low, meaning that house and apartments are being filled with worthy tenants.

The latest data suggests that the current national vacancy rate decreased to 1.1% in January of 2024.

To put this into perspective, a 3% vacancy rate is good because it shows a balanced market for both renters and property owners.

If it's below 2%, there's high demand for rentals, and if it's above 4%, there's more housing available than needed.

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Conclusion

Both commercial and residential SMSF property investment undoubtedly have their benefits and have the potential to positively impact your superannuation balance for retirement.

However, if you are looking for unprecedented rental yield offered by brand new house and land builds, think residential SMSF property investment, think Supavest.

Get in touch with the team today to begin your SMSF property investment journey in brand new house and land builds.

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