Learning The Secrets About Homes

By , December 22, 2017 9:44 pm

Demetrios Salpoglou: What are the Differences Between Commercial and Residential Real Estate Investments

Many of us are accustomed to buying residential real estate properties, but investing in commercial real estate is actually the better way to gain higher return on investment. Even if you already have residential estate investments, having commercial properties can help in balancing your portfolio. All you need to do is research and know the rules and terms when it comes to commercial real estate investments. In this article, let us dig deeper on the differences between residential and commercial real estate properties.

Unlike the income you can generate from residential properties, the value of commercial real estate properties is directly related to the usage square footage. Commercial real estate properties can help in diversifying the risks. For example, if you have an apartment building and you lose three of your 15 tenants, then you only lose a portion of the income instead of losing the entire rent as you would in a single-family residence. There is a greater cash flow owning a commercial real estate property because you lease per square foot and so you generate more income than what you can get by owning a single family dwelling. Commercial real estate property investments provide more stability on your cash flow because their leases are generally much longer than residential leases. Banks and other financial institutions value commercial real estate properties differently, needing higher down payment than residential properties.

Before investing on a commercial property, it pays off doing your homework by finding out the vacancy rates of previous owners and talking to storefront managers to find out what they like and about their business. Are they still interested renewing their leases? What are the things they like about the previous management? Are the businesses booming? Are residential houses being built in the area? What are the characteristics of the population or demographic profile in the area? You may want to also ask the status of the cash flow from the tenants. It can be rewarding understanding the ins and outs of commercial real estate investing.

Are you considering investing in a commercial property today? This must be the right time for you to consider investing in commercial real estate properties. There are really many benefits owning a commercial property that you cannot obtain by owning a residential property. If you want to know more about real estate investments, feel free to check our website or homepage now. It is time to embrace investing in commercial properties and become a successful real estate investor.

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