At Better Way 2 Build, we often get asked whether commercial property is worth considering as part of an investment strategy.
The short answer? Not usually — unless you’re already playing in the big leagues.
While commercial property can offer higher rental yields and longer lease terms, it also comes with higher risks, tougher finance requirements, longer vacancy periods, and fewer options to scale quickly.
If you’re still building wealth, residential development often delivers better uplift, faster.
Also read: Can I Use My Super to Buy an Investment Property?
Why Some Investors Look at Commercial Property
Commercial property can appeal to more experienced investors who:
- Already have a diversified residential portfolio
- Want to stabilise income with longer leases
- Are looking for tenants that pay for outgoings like rates, insurance, and maintenance
And yes, commercial properties can return 6–8% net yields, which is higher than most standard rentals.
But Here’s What You Need to Know
1. It’s Capital-Heavy.
Banks usually want 30–40% deposits, and the purchase prices are often higher than residential homes. This ties up cash that could be used more strategically elsewhere.
2. Vacancies Can Drag On.
Unlike residential properties that can usually be rented quickly, commercial spaces often sit empty for months between tenancies, and there’s no rent coming in during that time.
3. Your Buyer Pool is Smaller.
When it’s time to sell, you’re only marketing to other investors or businesses, not the broader homebuyer market.
4. No Leverage Like Residential.
You don’t benefit from the same capital growth leverage that comes with owning land. And most commercial properties won’t give you opportunities to add value through subdivision or development. Their value is strongly tied to the yield and tenancy agreement, for better or for worse.
A Smarter Alternative? Small-Scale Residential Development
If your goal is to build wealth — not just protect it — a residential development project often makes a lot more sense than buying a commercial asset.
In Perth, smart investors are turning to:
- Dual occupancies (house + granny flat or duplex)
- Subdivision and build projects
- Infill sites to build multiple new homes
These can deliver significant uplift within 18 months, often with lower risk, better finance terms, and more flexibility when it comes to resale or rental strategies.
Plus, you’re building equity through creation, not just capitalising on a lease.
So, Who Should Actually Consider Commercial?
We believe commercial only really makes sense if:
- You already own multiple residential assets
- You have access to off-market deals or high-profile tenants
- You’re looking to diversify and stabilise income after already building wealth
- You understand the risks and timeframes, and you’re in it for the long haul
If you don’t have those advantages? You’re better off doing a well-structured house & land investment or small development project first.
Our Take
At Better Way 2 Build, we don’t sell commercial property, and there’s a reason.
We focus on helping investors build wealth through development, new builds, and land-backed strategies. These approaches give you more control, more uplift, and a clearer path to scaling your portfolio.
If you’re considering commercial property but aren’t sure it’s the right fit, let’s talk. We’ll walk through your budget, timeline, and goals — and help you map out the best next step, even if it’s not with us.
Book a free strategy session today. Let’s figure out how to get your next move right.
