Even though both commercial and residential properties are profitable investments, commercial property investing is still the best option when it comes to people who want to make huge real-estate profits in the long-term. With commercial property, tenants tend to improve their units because it benefits their businesses.
Moreover, the commercial property units are also leased much longer as compared to residential properties. The only downside of commercial property investments is that it takes longer to get leased compared to residential property.
It can even stay for up to 2 years without an interested tenant. Here are some of the reasons why commercial property is a worthwhile investment:
1.Easier to raise a considerable capital
To start investing in commercial properties, you require a huge amount of capital. There are many financing options available when it comes to commercial property investing.
You can choose to raise money using the traditional financing options such as the hard money lenders, private money lenders, owner financing or even the conventional loans from banks.
You can also decide to raise money with the help of hedge funds, investment groups, and private equity firms. Moreover, commercial property investors can pool their resources together to have access to huge financing. Property for sale commercial will be easier to acquire because of the numerous financing options available – proplist.com
2.Higher return on Investment
Commercial properties have a higher ROI compared to residential properties. The average Return On Investments for commercial properties ranges between 6 and 12 percent while the ROI for residential properties can be around 1-4 percent. This means that with commercial investments you will be able to make more money per year as compared to residential properties.
3.There is less competition
Investing in commercial properties requires a lot of capital, and that is why most real estate investors prefer constructing the residential properties which require less amount of cash.
With commercial property investment, there are a lot of options to choose from. For example, you can decide to invest in shopping centers, offices, apartments or industrial buildings.
Therefore, if you are willing to take the risk and invest in commercial properties, you will make more profits with less competition as compared to the ever-crowded residential property sector.
Moreover, banks will be more willing to lend money to a commercial real estate developer with promising returns as compared to a residential property developer.
4.Lower costs of maintenance
Commercial property units have a lower cost of maintenance because the tenants invest in the appearance of their stores to attract more customers. If they leave their stores and storefronts in a bad state, they will end up making losses because no potential customer would want to be served at an ugly place.
This is beneficial to the commercial property owner because he or she will spend less amount of money on annual maintenance of the property. For residential properties it is the exact opposite: tenants do not care about the damages in the house. It would be up to the landlord to make repairs if there was no property inventory at the beginning of occupancy.
Commercial properties are a worthwhile investment. They have higher profits, and it is much easier to raise capital for commercial properties as compared to residential properties. The cost of maintenance of commercial buildings is shared between the tenants and the owner of the building. There is also less competition in the commercial property market as compared to the residential property market.