How property investing works You can put your Where you can invest: Property investing isn’t just about buy-to-let. Another option is to money in residential invest in commercial property. This means the buildings used by property or commercial Property businesses, such as offices, shopping centres and factories. property What are the advantages? Commercial property offers the potential for a steady return that is mainly made up of the rental income paid by tenants, though there Commercial property is also scope for capital growth. Returns from property investments offers a number tend to be quite different to that from other asset classes, so if you of advantages have a sizeable portfolio, an investment in commercial property for investors over could help you diversify and produce more stable returns. residential property Ways to invest It’s very hard for individuals to invest in commercial property directly, as it tends to require large sums of money to buy a building. Rental Commercial and default – albeit less likely than with residential property – is still a residential property potential disadvantage, along with less liquidity and maintenance offer security of costs. However, this is not all bad news, as there are many funds you income as well as can invest in that either buy commercial property or hold the shares capital growth of companies that manage/develop properties. For more information see our Spin-free guide to property. The differences between residential and commercial property Commercial property is normally a more stable investment than residential property. There are three main reasons for this: Leases The value of investments, and the The leases tend to last much longer – income from them, will fluctuate. five to ten years, compared with the six This will cause the fund price to months to a year of residential letting. 1 fall as well as rise and you may Tenants not get back the original amount The tenants normally have access to you invested. much larger sums of money, so it’s less 2likely they will fail to pay their rent. Notice periods The notice periods are normally longer, so there’s more time to find a new tenant 6 3when a company decides to move on.