Investment in residential or commercial property and how does location play into this decision?
The decision to purchase property often rests on what investment strategy desired. How does location play into this decision? We will go through some of the differences in differentiating these two types of investments.
- Residential Properties:
Residential properties are investments that have a roof above them and offer a living residence for an individual or family.
- Commercial Properties:
Commercial properties are investments that offer for lease for commercial or industrial use.
Property location is one of the biggest differentiators for these two investments. Residential properties are for living in because they are close to residences or communities.
While some commercial properties may be situated directly near residences, commercial properties are not. Most commercial property is found on major roadways, far enough away from residential areas to offer the necessary space for a business.
Benefits of Investment in residential property:
- It helps to create an alternative retirement plan.
- It will increase the wealth and liquidity of your portfolio.
- It makes a great addition to a diversified portfolio.
Benefits of Investment in commercial property:
- Commercial property also suffers arrears in predictable cases like residential properties
- Commercial real estate is more stable because it is affected by economic growth, decline, and population density.
- It offers the best return over any other form of investment over the long term.
Investment in residential or commercial property will differ based on a person’s goals and financial situation. If someone is looking for real estate investments to rent out, commercial properties will provide more rental income due to their higher leases. On the other hand, residential properties will accommodate more immediate returns with the potential for growth over time.