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What Is The Best Investment Option-Commercial Property Vs Residential Property

Posted by admin on March 18, 2021
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What Is The Best Investment Option-Commercial Property Vs Residential Property

When you are willing to secure your finances in the form of investing in some property, the following questions usually pop into your mind, what are the new real estate listings near me?, is there any commercial property for sale near me?, Or is there any residential property for sale near me? These are the normal concerns of a person who wants to fix his money in the property market.

According to Wikipedia, “Real estate investment usually involves the purchase, ownership, management, rental and/or sale of real estate for the means of profit.”  

Real estate investment offers a good ROI return on investment and tangible assets alongside financial stability. There are usually two main types of real estate investments, commercial and residential; each having its own distinctive characteristics, and pros and cons. In this blog, we will try to weigh down the differences between the two to help you choose the safest option for yourself.

But before moving into the differences let us define the simple definition of the two.

Commercial Property

Commercial property is a real estate property specifically used for business purposes, buildings that are built to generate profits for example offices, malls, stores, grocery shops, cinemas and much more.

Residential Property

It is a type of property that contains a single-family or multi-family structure that is usually occupied for accommodation, not for means of business.

Commercial Vs Residential

PRIMARY PURPOSE

As the definition suggests, the prime purpose of a residential area is accommodation where people live themselves or rent out their home to tenants. The unit area is less as compared to the commercial area.

Whereas a commercial area is consumed for business and investment purposes to gain profit for example a mall or cinema is considered a commercial property where people run their businesses.

OPPORTUNITIES

With time, the price of residential property increases so you can sell your property in times of need to earn a handsome amount of money. Whereas the price of a commercial area depends on the economic conditions of the country.

LAWS AND REGULATIONS

Laws for commercial property are more strict as compared to residential property.  The laws of a residential area are focused more on the rights of tenants.

POOL OF CONSUMERS

The residential area as compared to the commercial area is more consumed due to the rise in population. 

CAPITAL REQUIRED

Residential properties are smaller in size and require less money as compared to commercial one which is more expensive and requires more area.

FINANCIAL CRISIS

The demand for commercial property is highly affected by the economic and financial conditions of the country. Whereas a residential property is a safer option during financial crises.

STRUCTURE AND DESIGN

The architectural design and interior of both properties are different which leads to different constructional costs.

MAINTENANCE COST

The maintenance cost of a residential property is less which includes tax, electricity, gas, water etc because it is much lesser in the area as compared to a commercial property.

LEASE TIME

Longer for commercial property because people usually do not lease out their residential areas.

RETURN

Commercial property is the best option when it comes to returns because usually residential areas are acquired for renting and reselling purposes.

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