Residential or Commercial Real Estate Investment: Which is Best for You?

As an investor, one of the most important decisions you can make is deciding what properties to invest in.

Commercial, or residential?

It's not just a matter of your preference as an investor--your choice will change what kind of profits you realize later on. But most new investors don't know what makes commercial real estate investment different from residential.

Thinking of joining the market? Here's what you need to know to make the right call.

Commercial Investment

Commercial real estate investment refers to properties that are used exclusively for business. It could be anything from a mall to a gas station lot--it all depends on the property.

Commercial real estate is generally split into four categories:

OfficesRetailIndustrialMulti-purpose

It's also split into classes based on age, location, and quality:

Class A: the best (and most expensive) commercial real estate in terms of age, aesthetics, location, and infrastructureClass B: buildings that are in decent shape but not as competitive, usually selected by investors for renovationClass C: typically buildings 20+ years of age in less-than-desirable locations or in need of serious renovation or maintenance work

Unlike residential properties, commercial real estate usually entails much longer leases in the range of five to ten years. That's good news for you as an investor, since you don't need to find new tenants every year.

However, commercial real estate is much more subject to the ebbs and flows of the economy. People will always need somewhere to live. If the economy hits a recession, businesses are more likely to close their doors or downsize, which can leave you losing money.

Residential Investment

Residential property is the type of property most people are familiar with. These are properties where people live with their families, whether that's for a few years or several decades.

A few common types of residential real estate include:

CondominiumsSingle-family homesApartment buildingsTownhouses

When you invest in residential real estate, you're often investing as either a flipper or as a landlord.

If you're coming in as a flipper, you're looking for properties that you can purchase, renovate, and sell for more than the purchase price, ideally in a short turnaround time.

Serving as a landlord is a better long-term investment strategy since you can collect income on the property for many years to come. However, this does saddle you with the responsibilities of a landlord, such as maintenance and locating tenants.

Residential or Commercial Real Estate Investment? We Can Help

Whether you're looking into residential or commercial real estate investment, we can help make your money work for you.

We connect investors all over the world to lucrative real estate investment opportunities in the United States, including multi-family residences, townhomes, self-storage, and commercial buildings.

If you're looking to invest, why invest on your own? Sure, you could manage your affairs yourself, but the truth is, it will be a long process of trial and error. Instead, you could make your money grow from the very beginning.

That's where we come in.

If you're interested in investing with us or have any questions, use our contact page to get in touch.