Investing is real estate is indeed a good way to grow your money but, investing in residential and commercial property is different. It has continued to divide the investors like many other hot button issues of investing in real estate. Many factors influence the buying behaviours of investors including the knowledge and investing capacity that ultimately decides what property to go with.
To start with, definitely commercial property tends to cost more money than residential property. But, individuals ultimately have to choose the one that can maximise their chance for success. Of course, there is no one size fits all kind of conclusion here and individuals have to decide according to the global, local and personal issues. With this been said both the properties comes with their own pros and cons and needs a thorough understanding before heading for one.
Those with the residential would say it’s the least risky option while those in the commercial would prefer it because of its cash flow potential. However, the smart move would be to look for both to see how it fits in an individual’s portfolio. Everything ultimately zeros down on investor’s risk taking appetite and financial clout. Commercial real estate focusses on high demand location while residential property seeks for buyers in location that supports transport and social infrastructure. Lease between landlord and tenant also varies in both property market with the following:
- Commercial lease tends to last longer as compared to residential ones.
- The repairing and maintenance responsibilities are different.
- The legislation surrounding the relationship of landlord and tenant is different in both properties.
- The rent reviews are ‘upward only’ and that means a property’s rent can’t be less after review in commercial properties.
Both could be a good investment opportunity but, for money commercial typically offers more financial rewards over single family homes or rented apartments. An investment decision that is right for you would come by thoroughly going through both the pros and cons of investing in properties. Most of the time individuals are looking for an easy option and by default would go for a residential one as they would be much familiar with the physical and commercial structure. The idea should be open up the mind and evaluate the property investment scope.
By considering the objectives while evaluating the resources that includes time, money and skills the answer should come out clearly.