Property Investing: Commercial Vs. Residential Properties

There are two distinct investment options open to you when you decide to put your money in property: commercial or residential. There are benefits and downsides to each, so you need to be able to assess the potential hazards and rewards, and what kind of investment risks you’re willing to take.

Investing in a Commercial Property

In general, commercial property asks you to take higher risks but offers greater financial rewards. The tenants for a commercial property will be businesses and this means that the rental value is dependant on the health of the economy as well as the quality of the tenant.

When one tenant leaves, it can also take a long time to find a suitable replacement, meaning your investment could sit empty for a long period. Buying a commercial property also tends to be a more complex process and renovation costs are higher.

Residential Property Investments

The risks are normally much lower for residential property investments, as you are more likely to be able to fill your space quickly. You might find that your property is empty for a few weeks between tenants here and there, but high demand for residential housing means it’s unlikely to be empty for a prolonged period.

While residential properties are a lower risk investment, you will find it harder to pass on costs such as rises in utility bills when you’re bound to a rental agreement, and the return tends to be much lower than for commercial properties. However, buying in a popular area can drive your profit to higher levels.

For specialist advice on all aspects of property investing, including the pros and cons of residential and commercial lets, contact Rass Global Investments.

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