April 19, 2024

Illuzzi Letter

Envisioning And Creating Your Dream Home

Real Estate Investing Tips – Residential Property Vs Commercial Property

The definition of residential property is a distinct property that draws an income from houses, apartments, co-ops, and apartment buildings.

Commercial property is a term utilized for the description of property that’s income is drawn from non-residential such as retail space, office buildings, industrial business tenants, and all other non- residential dwellings.

The Advantages and the Disadvantages

Residential Advantages:

1. Large selection of tenants to rent to, and a great demand for rental housing.
2. High brink of income from consistent cash flow from multi-units and houses.
3. Residential property is relatively easy to finance, and can simulate home-financing.
4. residential property is commonly lower priced than property that is commercial.
5. Worst case scenario, you may dwell in a multi-family property and supervise tenants.

Residential Disadvantages

1. Management and maintenance is required consistently in residential property.
2. For a house that only has a single family inhabiting it, if no tenant pays or moves there is no income.
3. Repairs are more likely in residential property.
4. Harder to dispute a residential property tenant and there are boundaries that need to be adhered to.

Commercial Advantages:

1. Commercial properties offer long-term leases that provide consistent income and stability in the investment.

2. In commercial property management is not as demanding, because most leases state that is responsible for damage and repairs.

3. To fit up the space in commercial property the tenant can pay the landlord a flat rate fee and discount rent.

4. Commercial property owners flourish with steady incomes that increase as the value of the properties skyrocket.

Commercial Cons:

1. Commercial property loans are more difficult to obtain, because lenders require up front down payments that can be rather high as well as Adjusted rate loans can rise to unreasonable affordability.

2. Commercial spaces often are difficult to lease, and can sit empty for long periods of time; this is not positive for an investor who has limited funding. It also often takes attorneys to draw up the leases that commercial tenants must abide by.

3. Inexperienced individual’s who want to invest in commercial property should be forewarned that it is not easy just to jump into, and can be overwhelming to a new property owner.

There is not a perfect answer on what property is right for a certain purpose or person, however whether it be commercial or residential an individual who is seeking this sort of investment need to consider all aspects of the venture. Ask yourself what you really want to accomplish and do not haste into making an ultimate commitment until you are well aware of every worst case scenario that can occur. Once you have really thought about it all you will recognize what option suits you best.