In recent years, real estate has emerged as a desirable option for people looking for a place to invest and get a steady income. Well, this is entirely true as real estate is safe, secure and has a potential for high returns especially when you compare to the volatility seen in other investment areas. Real estate in itself has several categories, and it is apparent that they all have their fair share of advantages and disadvantages. When investing in real estate, the most common ways you could choose to go are the commercial and residential real estate fields. While residential real estate investment is an equally attractive option, commercial is the best of the two, and you should consider venturing into it if you are lost for choice. Read on and find out why you should do so;
When choosing a place to invest your money, the first thing that you need to look at is the potential amount of money you will get from it. When looking at this aspect, it is evident that commercial real estate is the best choice for you. This is justified by the growth of commercial activity in many areas when compared to that of residential ones. The rent charged for commercial property is relatively higher than that for residential property, and you should expect to earn more when you decide to spend your money on commercial property. Aside from the rental income, commercial property also appreciates faster due to the ever-increasing towns and centers in which these premises are based, and over a span of ten to twenty years, the value of commercial property can quickly rise to about fifty percent as opposed to the residential counterparts.
Still, on the income, commercial investment has another benefit over residential based on how you get your returns. When looking at residential units, it is seen that tenants continuously move in and out and it might be hard to maintain a steady stream of income since some months may go by without some of the units being occupied. This is not the case with commercial property which offers a steadier source of income. If you check out a mall as an example, you will notice that most of the businesses that have leased the premises are corporates who want to set up branches in that area or banks amongst other options. This way, commercial property tends to generate steady income since the tenants stay there for a long time and it is rare to see the movement of tenants in and out of commercial premises. This makes the income from commercial property secure as opposed to residential ones and this is crucial if you took some money from a lender such as a bank to invest in the commercial property.
Not as Much Competition
Owing to the complexity of commercial real estate, investors tend to face lesser competition as opposed to residential property. Residential property can be of any form and any investor venturing into real estate can easily channel their finances to this area. This might be a hurdle for many, but it turns out as an advantage for the investors who are bold enough to dive into it. Very few people are willing to invest in huge malls, industrial complexes and shopping centers and people who have these structures tend to have more control over the commercial real estate market in their area. This is vital for investors as they are more likely to worry about premise vacancy and reduction in prices of the rents that are as a result of competition.
Expenses Paid By Tenants
Another benefit of investing in a business for sale Cincinnati Ohio is that the tenants pay the running expenses of the premises, and the owner does not have to spend any money on it. Most of the people on these premises are businesses that may wish to tweak the appearance of the premise and make it consistent with their brand or even other stores within the same company. This way, the owner’s work is done from the moment they lease the premise to a business and all the maintenance costs will be taken by the people operating from there. Most firms would not wish to leave their premises and headquarters looking shabby just because they are waiting for the management to repair broken parts and so. This way all tenants will ensure that their office and store look appealing so that the appearance does not deter customers.
Residential property offers several benefits, but the life of a landlord is not the easiest as many will attest. The people living in such units believe that the landlord should repair all problems on any of the systems and you should expect even calls in the middle of the night regarding failed plumbing and electrical systems. This is not the case with commercial property management as you can hire an on-site manager to take care of all the operations. Management is less stressful, and you can comfortably take a passive role and the people renting the place do not even need to know the owner. If you look at it, keenly most of the activities in commercial investments occur during the day, and managers expect to deal with these issues during that time window. Very few businesses run through the night and managers can have an easy time during this period.
Some of the potential benefits of investing in commercial real estate property have been mentioned, and you need to analyze your options well before taking this path. No investment in this world is fully guaranteed, and as far as commercial real estate can seem attractive, some risks come into play. Take your time when assessing which specific type of commercial real estate investment you may think of venturing into as they all have their advantages and disadvantages as well. If you are not well informed, find a suitable real estate agent to guide you on what is available for the money you have, and which is the most attractive investment in your area.