Commercial Versus Residential Investing

There has always been the ever eluding world of investing. We see great movies of people who make and maintain billions of dollars in the stock market. Investing can seem intimidating. So, let’s look at the difference between commercial and residential property.

The market can change very quickly, and having the knowledge needed to keep getting a great return on your investment is having experience behind you. Commercial properties are good investments and so are residential, but what is the difference?

These differences would not be immediately evident, but let’s take a look.

The differences

In terms of commercial property, it is, for the most part, valued differently. There is a direct relationship when it comes to the commercial property between its producible income and square footage.

A commercial property helps reduce risk. To make it simpler, if you own an apartment building with 20 units, there is not as much risk associated with losing one tenant as opposed to owning a single family home. Also, an apartment may be easier to list and rent. Families are often looking to buy over renting.

An even better bonus is the fact that you can earn more cash with a commercial property. In general, you can earn more money per square footage.

However, when it comes to the bank’s, commercial property is also valued differently. It’s a good idea to find a bank that will loan for the commercial property. The downfall here is they could require 30 per cent more in a deposit.

Do Your Homework on Commercial Property

Investing in a property means doing your homework.  Take a good look at the vacancy rates in the area. Talk with local business owners and ask them lots of questions. How has their business been doing over the past year? Is it slow? Has it done well? Is the building up to code? Are there other developments happening in the area?

Check in with the former landlord. Ask them questions about the property and tenants. Have their tenants consistently paid rent on time? How does the rent need to be adjusted? This is the perfect time to adjust the rent based on the area. A new property means new changes. Ask what kind of complaints are common? Issues that reside in specifically that area.
However, in spite of the ideas you have about investing your money and time into property, there are benefits. So, start developing your portfolio. Get a partner. Invest.