Reasons Why You Should Invest in Commercial Real Estate Instead of Residential

One of the best ways to grow your wealth and achieve financial security is through property investment. Of course, it takes a lot of time, research, and effort to find success in the process, but if you play to your strengths, everything should work out.

When it comes to investing in real estate, you have two options, commercial or residential. Now, both have their advantages and disadvantages. However, it’s strongly recommended that if you can, go for commercial real estate.

Some people might think it’s more expensive, complicated, and so on. Owning a house is not as intimidating as owning a commercial property. But if you can manage to invest in a suitable property, the results can be very rewarding and encouraging.

People say that it’s better to invest in residential real estate than nothing at all. That can be true in some cases, but if you’re going to invest, choose the better option. Here’s what you can expect—a more diversified, balanced, and scaled approach to investing

Better Tenants

Finding good tenants is challenging no matter what. However, it’s honestly much harder to find high-quality residential tenants than commercial tenants. With residential real estate, you’ll be dealing with individuals that can be unpredictable, despite your best efforts to verify them.

On the other hand, there are plenty of profitable businesses out there. These businesses can bring in high credit with a lease backed up by the company and its partners. You’ll enjoy much more security with these types of tenants. Aside from that, you can also count on these businesses to respect and protect the property. That location represents their business, so not only will they abide by your terms and conditions strictly, they will also ensure that the place stays pristine and intact

Less Financial Responsibility on You

Residential tenants don’t often cover property taxes, insurance, and building maintenance. Those duties often fall on your shoulders. However, it’s very common for the tenant to cover those expenses with commercial real estate, depending on the type of property and lease structure. The type of lease structure you will want to create is what is referred to as a Triple Net lease, also known as, NNN.

Better Property Value

In the long run, you’re going to want your property value to increase. When it comes to residential real estate, you’ll have to count on comparable properties to either increase or maintain their value. This can be unpredictable as you never know what could happen in the neighborhood.

With commercial real estate, if the property in occupied by tenants, then the property value is determined by the property’s revenue. As long as the cash flow within the place is excellent and consistent, you can count on the property value to increase. You can make sure that this happens by choosing the right tenants and leases. 

Conclusion

A triple net lease has its pros and cons. But, if you plan Investing in commercial real estate can require more work and time. Ultimately, the cost of entry is higher. However, if you can work through those factors, your investment should provide you with handsome returns. The price might be higher, but what you get in return is worth it. It’s better to go through the more “complicated” process and enjoy the benefits in the long run

How Can We Help You?

If you’re interested in either buying, selling, or leasing commercial real estate, you’re in the right place. Saman Saba is a commercial REALTOR® and a real estate attorney whose ultimate goal is to empower real estate sellers, buyers, and lessees to make sound and informed decisions about their most valuable assets. Reach out today to learn more about your options and what you can do regarding your commercial property.

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