When it comes to investing in real estate, the decision is driven by the returns the investment would generate. Safety is also another important aspect taken into consideration while investing. Within a real estate, an investor can invest either in residential real estate or commercial real estate.
If you’re dipping your toes into real estate sector for the first time, one of the biggest considerations is whether to buy residential property or commercial property and which will maximise the return on time. Each option comes with its own set of benefits as well as own set of challenges. So, before making a final choice, consider the following benefits of each option
Benefits of Investing in Commercial Real Estate
Higher returns
In most cases, investing in a commercial property is a high-risk, high-return affair. But as the famous saying goes, “with great risk comes great reward”, commercial properties usually have better returns and cash flow compared to the returns on residential properties. With more space, commercial property owners can have more tenants, which equals more money in your pocket.
Easier to increase value
The market value of a residential property is determined by looking at the average value of similar residential properties in the neighbourhood. On the other hand, the market value of a commercial property Noida is based on how much revenue the property generates. The higher the revenue generated, the higher the resale value.
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Benefits of Investing in Residential Real Estate
Lower entry ticket
When choosing between commercial vs residential property for investment, a newbie investor will find it easier to afford a single-family home or multi-family home rather than for a commercial property. The cost of investing in residential property is certainly less than commercial property. Besides being relatively affordable, investing in a residential property is easier to understand whereas commercial deals are more complex and require significantly more time on research.
- Better stability
During an economic crisis, retailers are often the first to bear the loss. Thus, even though a commercial property may have long leases, it does not assure landlords and real estate investors that their tenants will run their business during that period. On the other hand, regardless of the state of the economy, people still need a home to live. Thus, residential property owners don’t feel the pinch of economic slowdown as compared to commercial property owners.
- Leasing process is usually easier
The lease tenure and types of payment for residential property are different than a commercial property. And it takes less time and money to find a tenant for a residential property. Also Read: Affordability Calculator
Final Words
Keeping in mind the above benefits, it is also important to examine the location, investment size and tenure of a property. It would help in making an informed and correct Investment decision to invest whether in a residential or commercial property.