Commercial Space Or Residential Property – Which Is The Best Investment?

Whether to invest in commercial or residential property is a difficult choice. If this is one of the many causes for your dilemma, when it comes to purchasing property, then read on for the solution.

We all know for the fact that any investment is vital, especially if it is in real estate sector. However, you need to be very careful and follow a few tips to choose the best property for investment. There are a few issues that are related to making these choices. Let’s look at them one by one.

Local Issues

Sometimes the local property markets might not go with the existing real estate trends in the region.

To justify this, let’s consider an example.

If the zoning regulations of a place is more restrictive, when compared with to other places or localities, it could either be due to shortage of land out there, or the real estate market might have hit the real low in that area. So, that locality prices might not go along with the market trends.

Even though the rental cost of the homes for single families are comparatively higher these days, the demand for homes on rent will never go down. Therefore local factors can make a big difference in the market value in particular areas.

Commercial Space Or Residential Property - Which Is The Best Investment?

Global Issues

Some of the countries often fall in the list of places that are under the brink of recession. Such global issues can often cause an impact on the commercial spaces available in that particular country. Rental rates often hit rock bottom when your commercial space loses its tenant, because of the recession period. Due to the excessive availability of commercial areas on rent, it becomes quite difficult for you advertise yours and find tenants. It is just the opposite in times when the economy of a country is stronger than ever, the demand for commercial space automatically rises.

Investing on Residential Units

Advantages

  • The demand for renting residential units never withers since people never stop migrating from one place to another. By courting potential tenants, you can automatically increase the yearly turnover.
  • Residential units cost comparatively lesser than the commercial spaces.
  • Flow of cash in residential units will be comparatively higher, especially when you own multi-units such as apartments.

Disadvantages

  • You cannot easily manage residential units all by yourself and may require professional assitance.
  • If you own only few residential units, then losing one tenant is equal to losing greater part of your yearly income.
  • Requires regular maintenance and care, especially the multi-houses.

When you plan on investing your money in purchasing residential property, make sure that you fulfill all the criteria as required under the housing loan eligibility clauses.

Commercial Units Investment

Advantages

  • Built-in escalations of rents automatically lengthen the overall time duration in lease. The higher the built-in escalations your commercial space offers, the stronger the chances of this space becoming an established one.
  • Tenants become responsible for the interior repairs that come within the space area that they rent. This clause will be added while temporarily transferring the management of that particular space area to their name.

Disadvantages

Renting or leasing any commercial space follows lengthy process than that of a residential unit. Attorneys will be involved, in order to make every clause clear to both the parties. The process will be based mainly on the nationality of the tenant.

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