People are looking for every conceivable risk and every conceivable little bump or wart. Hey - this is property investing, she's not risk free, no guarantees. No-one ever said anything about that.
I love the idea of this level of income, but I don't know if the company will go bust, or the various other risks that have been mentioned, and then it won't matter at all how much income I "did" have because I'll have none. That, I guess, is one reason the reward is greater for one commercial property against, say, two or three residential properties for the same purchase price.
This supposed 60K p.a. profit generated from this one property is like a second wage, another man on your team working for close to the Aussie average salary.....based on the investor putting absolutely diddly squat into the investment....not a brass razoo, and having the Tenant pick up virtually every cost to hold the investment including interest on the full 100% mortgage, having a free carry completely.
The profits per annum are so large that one can realistically look to paying down the loan. That can never be said about houses and flats. A house would never generate enough rent to pay for interest on 100% of the loan required to buy the house, let alone any rates, water rates, insurance or maintenance costs....so nothing left, no profit at all for paying down the loan, not for many years, and even then, inconsequentially small amounts compared to the loan size. No extra man in your corner beavering away every day to help you get out of your job.
I don't agree with your last paragraph at all. I've just done rough figures on the house we paid $156K for about 12 years ago. Well within ten years of owning it the value was $750K and the rent we get now is $600 per week. So this is the reason I trust residential properties, well chosen and with time under our belt. We've spent about $30K on this house over the years, added a deck, new kitchen etc. Cost base is about $200K and interest on that @ 6% is $12K per annum. We are getting rent of $31,200 per annum. So, this is why I'm happy with residential.
Give me a gaggle of these in the portfolio, all beavering away in my corner so I don't need to. Remember, these are tiny little entry level properties. This is the start of the road, not the end. What will blow your cookies is when you come up against properties that are 10x the size of this one, with better Tenants, better leases, less risk and 10 or 15x the free cashflow available. This is when your job becomes a joke, you can afford to give the boss the flick and start running your own life and get into some serious life changing investing.
I appreciate the higher return on commercial, but prefer residential for all sorts of reasons. I know it, the risk is less. Return is less too. But I'm not likely to ever go 6 months without a tenant.
I will never say never though.