Many people think that real estate investing is a straightforward procedure. They think you buy and sell houses, and it’s simple. However, it’s more complex than that, and there are different types of real estate you can invest in. Today, we take a look at commercial and residential properties. We pit them against each other to find out which one is the better investment option.
Commercial
It’s rare that you hear people talk about commercial real estate investments. It seems like everyone has been caught up in the world of residential property buying. They’ve forgotten that there’s another option other than buying houses. Commercial real estate involves investing in properties that are used for commercial purposes. This could be retail space that someone turns into a shop. Or, it can be an office building for people to rent out.
Obviously, the main thing you want to know is whether or not it’s better than residential investments. Well, commercial real estate does have a few pros and cons. Mainly, it’s incredibly easy to find tenants for your properties. Get a good property in the right location, and you’ll have loads of businesses waving cash at you. There are also lots of companies like Triple Net that provide commercial investment advice too. So, there’s help out there to ensure you make the right purchase.
The only downside of commercial properties is that you’re restricted in how you make your money. You’re pretty much confined to leasing the property and earning rent money. Now, while you can still earn loads of cash this way, it’s different to residential properties. For example, you can’t flip an office building for profit.
Residential
As I mentioned earlier, residential properties are very popular amongst investors. They’re usually the ‘go-to’ piece of real estate for newbies. If anyone expresses an interest in real estate, they’re directed towards houses, apartments, etc. Why? Because there are lots of benefits to this particular investment choice. Likewise, there are a few negatives too.
To start the benefits, there are more residential properties on the market than commercial ones. It’s just natural to have more homes in an area than offices/retail spaces. This means you have more choice, and can make more investments at the same time. Secondly, you can make money in various ways. Property flipping is highly popular, as is buying a home and renting it out.
As for the negatives, it can be harder to find tenants for your rental properties. Generally speaking, people prefer to own a house rather than rent it. Also, flipping properties can cost money and be a bit of a risk too. When done correctly it can earn big money, but, there’s always an element of risk involved. Finally, the cost of a single house is often more expensive than the cost of a single commercial property.
In conclusion, which is the better real estate investment? If you’re keen on the buy-to-let game, then commercial may be the best choice for you. But, if you’re more of a flipper, then residential is the only way forward. Both options are great and can earn you big returns on your investments.
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