Investing in Residential vs. Commercial Real Estate

No description

Residential Property Investing

The best benefit of residential rentals is the people's understanding with that kind of real estate. Rarely, you'd find a person who has never rented or lived in a house, but most potential tenants already have. Most are acquainted with the processes involved in this housing business. They are also pretty well in the know systems of a house, being the Plumbing, electrical, and air conditioners.

Another benefit of renting residential property is the large number of applicants. Vacancy is usually low and at the right price your property s not likely to stay empty for long.

One of the biggest problems for most new investors is that when a market is tight, the investors become very vulnerable. Many people just don't care about you, and they're willing to separate you from your dough.

The house that you're renting out, doesn't have to be particularly pretty, because you know that the land value will appreciate. Be aware that one day, property value will go down, but that is only speculation. If you decide to buy smartly, and ensure that the proper safety margins are in place, then it does really that every month that building is being paid off. In other words, it's paying you to own it. And that fact is what investment is all about.

Smaller entry-level properties usually go very quickly because there's a lot of competition.

Commercial Property Investing

When the new CMHC rules came into play April 19th, the commercial property industry was really the big. Commercial properties generally require developed entry requirements. Deposits, or better known as, down payments are 30 to 35%. Financing is will never be CMHC approved so you definitely need a very good credit. You'll also have to agree to put personal guarantees on the building. Your mortgage rates will higher. There are many of little industrial, office and retail condominiums available for the beginner investor. A mixed-use building is also an option to buy, and it that has a few apartments on the second floor with retail below.

Depending on what you buy there may be lots of building elements that you are not familiar with. Some industrial buildings are full of commercial equipment. Some machines was the size of two pickup trucks next to each other. Remember units that you wish to buy can be outfitted for anything from an office a restaurant, or any other type of business. Very often, there won't be a presentation so you have to look past the dust and clutter.

These kinds of properties will be more difficult to rent. Evaluation the feasibility of that business is a must. We've once rented a space that had been vacant for three years. The location was a clothing store. It was based on a quiet one-way street, and had no foot traffic through its doors. We cleaned out the store by donating all the clothes to charity, we power washed and painted it, then rented it out as office space one month later.

Generally the spaces stay empty longer become more difficult to rent. You have to be proactive and be willing to spend some money on advertising. Consider changing the use of the building. Clean up and present the building space in very good looking conditions.

Once the office space is rented the tenants will stay for a long time. It's not like having to pack up a cube van for residential tenants. Moving is very expensive for Commercial tenants as they have expensive commercial equipment and clients to notify. So be sure to usually look forward to long leases. Five or ten year leases with options to renew are normal. Certain types businesses are obviously more risky than others for failure, so it's logical to do oyur home work on the business first and choose accordingly.

There are no frills when it comes to talking about commercial property. Be sure that there's a lot less competition for these properties but these properties are sold in a different way to what your residential estates sell at. There are a lot of income statements and expense reports that need to be shown. Try to ignore the ìappeal to emotionî sales strategy, when looking at income property. You'll never live there so just look at the numbers.


We use browser cookies to give you the best possible experience.

We use browser cookies to give you the best possible experience. To use our site, you must agree to our Privacy Policy, which includes cookie policy.