The Pros and Cons of Commercial vs. Residential Investment

Making a commercial investment requires careful thought and consideration because it involves a big amount of money. Location may be one of one of your biggest considerations, remember that a property may not have neighbouring residential areas or infrastructures, it may still have the potential to become a booming industry especially when in an area where population is growing.

Commercial vs. Residential

When it comes to sustainability, sentinelpg.com.au explains that commercial property investment has its advantages over residential property. Consider the number of tenants renting commercial space compared to residential house. In case the tenant leaves the house, the owner has no other source of income and no other alternative than to look for a new tenant who cannot immediately occupy his house. On the other hand if only one out of ten tenants vacates the building, the owner still has other sources of income.

Flexibility

Another advantage of commercial property is that you have a wide array of choices on how you are going to use it. You can convert your commercial property into a parking lot, factory or warehouse; you can rent your building space for offices, schools, shops or stores, and even apartments like hostels and dormitories. Depending on what’s trending or lacking in your community, your commercial property has the potential to provide you with a steady or lucrative source of income.

More Expensive

The downside of commercial property is that it is more expensive than residential property. Often, you would need business partners to purchase a commercial property. Then you have to pay higher bank interests and taxes. Moreover, there are zoning regulations you need to follow regarding the kind of business you plan to put up, not to mention more paperwork involved.

Nonetheless, real estate appreciates in value over time. Commercial property is still one of the most preferable investments of businessmen because it has a very high yield of return of investment (ROI).