The most common dilemma for an investor, while investing in a property, is to choose between commercial v/s residential properties. As both come with their own set of pros and cons, it becomes a more critical decision to tackle. One has to be very precise while investing in a property as there are many aspects to consider first. Also making your preferences clear and figuring out every detailed aspect such as benefits, drawbacks, and risks will make it easier for you to make the right choice for investment.
The advantage of commercial property is that cash flow and returns are far more attractive. Longer lease terms, higher returns and rental yield, easily increasing value are some advantages that will benefit investors. A longer lease means lower turnover costs, lower vacancy rates, and a higher guarantee of reliable cash flow. The lease takes care of all the property expenses directly which includes costs such as building insurance, property taxes, and the cost of any repairs or maintenance and hence triples net leases. The market value of commercial real estate depends on the revenue generated by the property. As the higher the revenue, the higher the resale value will be. This means if you can increase your cash flow, you can increase the value of the investment property.
The average investors, who wish to invest in residential properties, will find it easier to opt for a single family home or multi-family home rather than for a commercial investment property. Lower cost of entry, a pool of buyers and tenants at large scale, easy leasing process are the major advantages of residential properties.
Besides being relatively affordable, residential property investment is easier to understand. The cost of investing in residential real estate is comparatively less.
The demand for rental properties will always be high as everyone needs a place to stay. The larger pool of buyers and renters are attracted to residential properties, therefore, the leasing process is usually easier. This is why investment in residential properties would be the best option for investors.
Still wondering which is the best option? The simplest answer for this would be, it ultimately depends on what investors want to gain by investing in real estate. To make a quick start or wholesaling, a residential property might be the way to go. On the other hand, if you’re looking to achieve passive income and higher returns, commercial properties would be a more suitable choice.
Whatever choice investors make, Namrata Group is always ready with an array of residential as well as commercial projects all around Pune. Come and have a look at our property options.