Which Is A Better Investment Property Residential or Commercial?
When most people are searching for investment property in Florida, the one question they have is if they should opt for commercial vs. residential property. While each type of property can prove to be valuable, i.e., profitable, but in our experience commercial real estate is a better option. However, you should be willing to undertake a large venture to make a more substantial profit.
Commercial Investment Property Makes It Easier to Get Funding
It goes without saying that investing in commercial properties will require large capital. The significant difference with commercial properties is getting that investment is easier especially from lenders. When buying residential properties investors need to source money from private money lenders and hard lenders or use a traditional financing method. There aren’t many other ways of getting your hands on even small capital.
Take for instance investment property in Texas, which provide a higher return on investment (ROI) compared to residential properties. The average ROI for commercial properties in Texas and Florida is between 6% to 12%, while for the average residential property it is between 1-4%. So, property investors have the ability to make more money each year which reflects positively on their net worth.
Far Less Competition
Commercial investment property like shopping centers and office buildings is a pretty massive undertaking. It is precisely why many investors tend to shy away from investing in commercial properties. Then there are various types of commercial properties like retail, industrial, apartments, and offices, etc. Within each, you’ll also find many sub-types. Investors willing to take risk, with a higher ROI, commercial properties offer less competition and more opportunity. You’ll also find that banks and other lenders are willing to lend investors looking to snap up commercial properties.
Investing in Mixed Use Commercial Property
There are many mixed-use properties for sale, and each should be considered on its own characteristics because of their diversity. These properties are slightly different from your typical commercial and residential properties. They also offer some additional risk compared to other single-use structures. However, they offer some pretty strong valuations and excellent long-term performance which translates to a handsome income and a pretty good long-term return.
Investing in commercial property is perhaps the best decision you can make as an investor because its benefits far outweigh potential cons. However, it is not for every investor, and that’s something we’ve seen from personal experience. So, ensure that you’re financially qualified and have the knowledge or a team required to pull off a lucrative commercial property transaction.