When it comes to investing in real estate, a lot of research has to be done especially when trying to choose between residential vs commercial real estate. As an investor one has to decide what kind of property they want, the part of the country said property will be located, etc.
What is residential real estate vs commercial real estate?
Residential real estate can simply be defined as rented housing. Any property that is created for the sole purpose of living is termed residential real estate.
Commercial real estate is any property that can be explicitly used for business purposes, from offices, industrial properties, etc. these properties come in all shapes and sizes.
Difference between residential real estate and commercial real estate investment:
One of the major differences between residential and commercial real estate lies in the way they are rented/leased. The aspects of investing in them are also quite different.
Residential properties offer better returns in most areas of the country and do not require so much capital while commercial property rents tend to be steadier and lease terms are more concrete and long-standing.
Pros and Cons of Residential Real Estate:
1. Consistent demand
2. Shorter leases
3. Ease of management
4. Easier to lease
5. Selling strategies
1. More landlord responsibilities
2. Increased competition
3. Potential for a greater vacancy
4. Damaged properties
5. Nonchalant tenants
Pros and Cons of Commercial Real Estate:
1. Larger rental incomes
2. Business tenants
3. Easier to increase the value
4. Limited operating hours
5. Longer leases
1. Specialized management
2. More difficult to finance
3. Volatility during recession
4. Higher barrier to entry
5. Limited exit strategies
In conclusion, both residential and commercial real estate have major differences and pros and cons, but it doesn’t make one better than the other. Most investors prefer residential to commercial because it is more accessible and affordable.
Finally, are you wondering about what real estate investment to key into? Talk to our real estate investment advisors today on:
☎️ +234 912 1212 126
☎️ +234 912 1212 127