There are mainly two types of real estate i.e. residential and commercial. Both strategies have their pros and cons and anyone could make a huge fortune out of both, provided they invest keeping in mind the advantages and disadvantages of both. A natural inclination towards a particular type of real estate or aptitude does play an important role to decide whether or not you should invest in a particular strategy, keeping yourself aware of the pros and cons helps you prepare yourself psychologically.
As the name suggests residential properties or estate have to do with one’s residence whereas investing in commercial real estate implies commerce as these properties are meant for starting a business, renting or selling it off to businesses. Investing in commercial properties offers great financial rewards and is generally considered profitable than investing in residential properties but there can also be some risks involved.
As per the real estate industry leaders such as Austin Kerr – Set It off and others, you may have to bear additional expenses to hire property Management Company that may charge 5-10% of the rent revenues for their services.
Below are some pros and cons of investing in a commercial property that you must consider before making an investment decision:
Pros:
- Huge Income Potential: Commercial properties do open many doors of opportunities. As investing in it is more of like dealing with a company or a business, you end up earning a fixed amount of passive income, if not starting your own business. You may lease out your property earning money without actually working for it. Investing in a commercial real estate may seem daunting in the beginning but as per the real estate experts in US such as Austin Kerr – Set It off and others, it is likely to generate a huge cash flow and is even less risky as loans do get approved easily for these properties as there are a higher chances of loan recovery once you get stability in the business.
- Professional Conduct: It offers immense profit opportunities. You could lease out the property to have financial freedom. As the leasing or renting out of commercial property does involve dealing with business persons, it is not surprising that you could expect professionalism from them. These individuals would like to have everything documented to avoid inconveniences or legal proceedings.
- Stability: Depending on whom you are leasing out your property to, you can expect a certain amount of stability because it does help businesses to flourish and make a name for them in the market. Invest in a commercial real estate is unlike investing in a residential property where you would have to worry about a new tenet every month due to stability issues.
Cons:
- Time Management: Making profits out of commercial properties do require time management. You can’t afford to be an absentee who shows up whenever he/she feels like. Dealing with a company requires an immense amount of professionalism as being a business person no one would like their work to be hampered. These companies may approach someone having better time management skills. With commercial properties, you are more likely to deal with multiple leases, maintenance issues, and public safety concerns.
- Professional Help Required: Handling maintenance issues of a commercial property may require you to hire someone to help with emergencies and repairs unless you are licensed to handle these issues by yourself. You must add property maintenance expenses in the overall cost of the property before making a deal. You may hire a property management company.
Summary:
There are mainly two types of real estate i.e. commercial and residential. Both types of real estate have some pros and cons. You must know the advantages and disadvantages of investing in a particular strategy, to make profits and avoid losses. Investing in commercial properties offers great financial rewards and is generally considered profitable than investing in residential properties but there can also be some risks involved.
The pros of investing in a commercial property that you must consider before making an investment decision include huge income potential, professional conduct, and stability. You must have excellent time management skills and you may require professional help to handle its management issues. Investing in a commercial real estate may seem daunting in the beginning but as per the real estate experts in US such as Austin Kerr – Set It off and others, it is likely to generate a huge cash flow and is even less risky as loans do get approved easily for these properties as there are a higher chances of loan recovery once you get stability in the business.
