Beyond the option between Investing in commercial property and residential property, actually these two type of properties have good investment potential. Of course, these two type of properties have different financial reward as well as the risks.
You must be familiar with this supposition where the more risk you take in http://22.214.171.124 business, the greater profit you will get. There are no different between property investment and other kind of business opportunity.
Typically, residential property unit provides lesser financial reward than commercial property unit does to the investor. Residential property units including single-family homes and apartment units, while commercial property including retail buildings, office buildings, and industrial buildings. Despite income from commercial unit is higher, risk this unit offering is also bigger.
In order to make decision whether you want to choose commercial type of property investment, you have to understand what is offered by this property. Actually, there are many positive reason why you have to purchase commercial real estate:
- a) High Earning Opportunity: Investing in commercial property will give you higher income potential that residential property. In residential property, you only get most income from monthly rental by personal usage. But things are different with commercial property.
Depending on the area of the commercial property, most of the investor will get 6% to 12% annual return off the investment price. While residential only gives you 1 to 4 percent annually.
- b) Public Eye: In residential property, you should be grateful as a property owner when the tenant at least cares about the condition of the property. Many irresponsible tenant leaves the property freely while he caused any broken condition of the property. You will not face this risk when you rent the property to retail tenants.
Retail tenants have the same interest as yours, the property owner, to keep the building in a good condition. When they let the storefront and the store break, absolutely it will affect the business. None customers want to shop in a broken shop. Thus, you and your tenants will have the same interest to keep the building in a best condition.
- c) Professional relationship: In commercial investment property, you will rent the building to corporate or someone who has business intention. When two party with same intention gather, you can get business to business relationship with the tenants. Therefore it maintains the interaction stay courteous and professional as business partner. The things are different when you rent the property as personal usage.