The differences between commercial and residential real estate
commercial real estate
Positives
- The owner of the property does not have to deal with the expenses related to the repair and maintenance of the property or to develop it significantly, because in many cases he is a tenant and will deal with the property in a way that suits his work temporarily, which makes it in the most beautiful picture and serves the purpose of the property.
- The flow of funds is excellent for a long period of time because the lease contract can extend for a long period of time, up to 6 years or more, with no space available.
- The owner of the property is not required to deal with the tenants, especially if the investment is large, for example, building retail shops, he is not required to solve their problems or to collect rent costs because large real estate investments are often managed by real estate management companies whose task is to deal with such All these things without the need to bother you.
- Tenants have good money because they are commercial or work in trade and sale.
Negatives
- Investing in commercial real estate requires a large amount of money because it costs a lot
- Often tenants rent a place to manage their business in difficult economic conditions, which makes the possibility of their exit quickly before the expiry of the lease contract, and this matter will leave the owner an empty space without rent or ownership for a long time and having to cover operational or continuous costs such as electricity or water, maintenance and other services until Find another new tenant.
- An investment in the investment field needs a lot of cash to invest in this type of real estate, bearing in mind that bank loans for this type of real estate are much less than residential real estate, so you must have a large amount of money in your possession before thinking about this type of investment.
- Difficulty finding tenants sometimes is one of the downsides of this type of real estate and sometimes the difficulty of finding someone to pay the required amount for rent.
- It is also difficult to sell real estate because the demand for commercial real estate, such as buying or owning, is not intense enough.
Residential real estate
Positives
- Ease of finding a tenant in residential real estate because people are always looking for a house or apartment to live in.
- Investing in residential real estate does not cost as much as commercial real estate.
- Investment continues in this type because people do not get tired of looking for a place to live, and the financial flow may be small compared to commercial real estate, but it is continuous.
- The place will not be empty at any time, whether there are difficult economic conditions or not
- Ease of selling residential real estate, especially if it is in an attractive area, close to vital sites, and there is a public escort in it.
Negatives
- If you want to invest in the field of residential real estate, you will have to deal directly with the tenants and find solutions to their problems yourself, because hiring a real estate manager can be more costly to you than the rental fees.
- You may encounter problems such as not paying rent on time and also not leaving the house at the end of the lease term.
- Some tenants will cause you some damage to the property, which will cost you the repair and maintenance of the property after the tenants leave and before renting it to someone else, and thus pay an amount for maintenance or other costs.
