Commercial vs. Residential Real Estate Investing: A Quick Guide

by Alexander Griffin
Commercial vs. Residential Real Estate Investing

You’ve run in the rat race for years now and you’re ready to expand your income with a new investment. Since 90% of millionaires made their fortunes with real estate, that sounds like a great place to invest!

One thing you haven’t decided yet is what kind of real estate to invest in. Do you want commercial or residential properties?

We put together a guide to explain commercial vs. residential real estate investing. Keep reading to find out which property investing venture works best for you.

Benefits of Commercial Real Estate

When considering commercial real estate investing, there are a ton of benefits for the investor and their community. Here are some of our favorite benefits of owning commercial real estate.

  • faster value increase
  • longer-term leases
  • more qualified tenants
  • higher financial return potential
  • brings money and jobs to the community

Benefits of Residential Real Estate

On the other side of the issue, there are also many benefits of investing in real estate zoned for residential use. These are the top benefits you would see in a residential real estate investing guide.

  • lower property prices
  • lower tenant turnover rate
  • more potential tenants
  • more buyers if/when you want to sell
  • recession-resistant

Commercial vs. Residential Real Estate Investing Loans

It’s harder to secure a commercial real estate loan versus a residential loan. Banks want to see a thought-out business plan, a great credit score, and more to approve a commercial real estate loan.

The terms of the loans differ between commercial and residential real estate as well. Commercial loans have shorter terms and higher interest rates because banks think of those loans as riskier than residential real estate investing.

Choose the Right Real Estate Agent

Part of making smart real estate investment decisions is bringing in the right agent to help you on your journey. While every skilled real estate agent can give you great real estate investing advice, you want to hire someone that knows the kinds of properties that you want to invest in.

Commercial real estate agents make more money per deal, but they tend to work during bank hours. Residential real estate agents tend to work more irregular hours and know how to find tenants for your investment properties in a hurry.

Don’t Wait to Buy Real Estate

One common real estate investment mistake is waiting too long to decide on a property. If you wait too long to make a decision, someone else will snatch the property right out from under you!

Keep these tips in mind when considering what kind of investment property to buy. Once you get started, you’re on your way to becoming a real estate mogul!

We hope you enjoyed reading this article about commercial vs. residential real estate investing. If you’re looking for more helpful articles about finance, lifestyles, and much more, check out the rest of our blog today!

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