Deciding Between Commercial and Residential Property Investment

commercial propertiesStyles and trends in the economy and the consumer market play significant roles to the overall success of a property investment venture. Understanding how they work and how you can take advantage of them creates better opportunities for bigger returns. This applies no matter if you’re into local or overseas properties.

Economy, a Major Basis for Location

Demand is the major driving force behind both residential and commercial property investment. Understanding how demand rises is crucial in determining where to invest and what type of investment to undertake.

Countries experiencing huge economic growth subject themselves to the interest of foreign investors. Where economy booms, so is a demand for more roads, which leads to a demand for more construction materials, and later to infrastructures that will cater to the population it will attract.

Depending on the primary function of the place, either commercial or residential property investment, promises the best returns.

Overview of Commercial Property

The Sentinel Property Group explains that commercial property investments apply to one of these three: industrial, retail, and office. The longer leasing duration – often ranging from three to ten years – poses a great advantage for the owners. The main benefit they acquire is a steadier flow of income for a set period, accompanied by annual increase in CPI.

The tenants, furthermore, shoulder the responsibility of paying for outgoings. Property maintenance shouldn’t be such a big problem, considering that most companies go to great measures to create a presentable office.

The notable risk in pursuing commercial properties is avoiding vacancies. Finding tenants may take weeks or months at a time; hence advertising and networking prior the start of the leasing period prevents revenue losses.

Overview of Residential Property

Residential property investment remains stays more resilient against economic crises compared to commercial ones. Vacancies are also easier to fill especially if the property stands in a location where basic needs and commodities are accessible.

The leasing period normally spans six to twelve months, after which the tenant and the landowner has to decide whether to renew the contract. While sustaining tenants may sometimes be a challenge, the number of prospects is usually high.

Maintaining the property requires sufficient funds to meet the preferences of your target tenants. This investment pays off especially when they compel tenants to renew their contract for another twelve months. However, landlords should expect that the rental fees they collect answer for their property’s outgoings, unlike that of a commercial property.

Choosing between residential and commercial property entails plenty of research on current and future trends. This challenge proves to be more difficult if your options are overseas. Make sure to consult with property managers and government offices for legal matters.