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08 Jun
2017

Raul Harman

Innovative enterprise consultant
 

Investing in real estate is one of the most efficient ways to increase your profits and create a solid, sustainable source of income. The real estate industry poses safer conditions than other investment industries such as the stock or bond exchange, or the forex trade, because of its low risk margin, tax advantages and leverage.

That said, the differences between commercial and real estate investing are numerous and in order for your efforts to yield the success you dream of, you need to understand the peculiarities of each market and decide which of the two will provide you with the best ROI (return on investment).

The real estate business is one of the most lucrative career options in the world, but before you spring for the yellow pages, you need to learn about the various intricacies that could make or break your investment dreams.

The advantages of residential over commercial properties

There are people all over the world making a fortune by investing in both commercial and residential properties, and it would be presumptuous to say that one is strictly better than the other. However, there are certain advantages of residential real estate that are worth mentioning, even though commercial real estate is the most lucrative type of investment in the world.

First of all, it is easier to venture into and understand the residential market. If you’re just starting out, figuring out the investment amount and calculating all necessary expenses is an easy process entailing the cost of the house or apartment, the cost of repairs and renovations, the post-renovation worth, and the final maximum rent value. Even though it is a simple process, it still takes time and experience to make exact calculations to maximize your ROI.

Contrary to residential properties, commercial real estate investments are harder to calculate and include a greater number of variables that you will need to take into account. You will need to research and calculate the same details as for residential real estates, however the process is more complicated and ambiguous for those with less experience. Everything from the location to the type of tenant you will need, from the type of lease to the future worth and desirability of your building - these are important factors that will greatly affect the rent cost and value of your investment.

Secondly, residential properties are more stable in a down market. This is simply because the state of the economy is less relevant in the eyes of residential buyers - people need a place to live. On the other hand, the state of the economy will greatly - if not solely - determine the value and selling probability of your commercial investment, simply because of the fact that not everyone needs to own or rent a store or an office space, and thus the probability of your commercial investment staying vacant for months or even years, is much higher.

The benefits of a commercial real estate investment

All of this is not to say that you cannot find success and even fortune in the commercial real estate market. Although it requires more prudent planning, quaity commercial real estate is a great way to earn a lot more money in a shorter amount of time than with residential investments. You simply need to develop a knack for spotting opportunities and employ the right professional help, and the rewards will be unparalleled.

There might not be a fast turnover rate, but the value of a commercial property in combination with a solid long-term tenant will yield unmatched revenue by any other investment market, for years to come. With diligent research, you can discover and tap into a profitable market easily, and ensure your investment in a prime location within a rising job economy. If you manage to secure your investment in an area with a fast rising job market, you will essentially ensure a quick rise to long-term wealth that will keep growing exponentially.

The key is to carefully choose your market. Lucrative commercial real estate options are frequently hiding in residential areas and vice versa, and by investing in the right venue that a commercial tenant has their eye on, you can not only secure a local monopoly for your business, but also raise your value and rent prices to retire from this investment alone.

As you can tell, there are plenty of lucrative opportunities in both spheres of the real estate industry. The only thing you need to ask yourself is what kind of success you are looking for, and whether you are willing to put in the necessary work to create the best possible ROI and collect your first million-dollar check by the end of the year.


 

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