1. When you invest in a residential property, you may have to bring in only 10 – 30% of the loan-to-value ratio (LVR), making it easier to finance not just from traditional banks but also enabling you to explore other lending options.
2. Meanwhile, commercial properties require a larger initial investment, where you would have to invest 50 – 65% of the LVR. Also, financing for commercial properties tends to be more complex, with strict criteria such as higher credit score requirements, larger down payments and detailed business plans.
3. A residential property is governed under the Residential Tenancies Act, which helps ensure standards for healthy homes, smoke alarms, application process, background, reference and credit checks, rent increases and more.
4. When you invest in residential property, you gain a steady rental income. Regardless of how the economy is performing, there's always a demand for homes, which makes residential investment more stable.
5. On the other hand, commercial properties yield higher rentals and long-term tenancy, providing substantial cash flow. Yet, there's a flip side: the demand for commercial spaces rises when the economy is thriving and nosedives when there is a downturn, leading to some volatility.
6. When you rent commercial property, the tenants mostly manage the maintenance, insurance, and related expenses. This reduces your burden, unlike with residential properties, where you, as the owner, are responsible for the overall maintenance of the home.

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