Do you want to start investing your money in a real estate project but you cannot decide between commercial real estate vs residential real estate investing? Are you asking yourself which type of real estate investment is more profitable and has the highest return on investment (ROI), is it the commercial property investment and the cash flow it brings or the residential property investment and the rental income it offers?
What comes to your mind when you think about it in terms of commercial real estate vs residential real estate investing? Thanks to this article on commercial real estate vs residential real estate, you will no longer think alone and you will have a comprehensive practical guide to decide upon.
This guide will take you through all the steps of the real estate investment process, shedding light on the pros and cons of investing in commercial and residential properties. It will also help you in deciding between commercial real estate vs residential real estate investing.
Why Real Estate Investment?
Let us first address first things first. We cannot hold a compression between commercial real estate vs residential real estate investing without giving you an overview first of the real estate market and its investments.
Investing money in the real estate realm has been on the rise lately thanks to market fluctuations and economic drops, the real estate market is one of the most stable and safe to invest in markets with the highest return on investment (ROI).
The common question that is always asked here is “Why should I invest in real estate commercial and residential properties rather than other investment types?
To answer this question, let us tell you that:
- Real estate investment is well-known for its long-term profits
- The high return on investment (ROI)
- Real estate investment offers various options between commercial and residential properties to invest in
- The increasing demand for real estate properties and the flourishing of its market lately offers various opportunities to invest with high profit
- Owning a tangible asset that you can use, invest in, and sell at any time with the highest returns
You can refer to this guide: Why Real Estate is a Bad Investment Unless Done Right? To learn more about the pros of investing in the real estate market.
Finally, you need to know that investing in the real estate market can be through investing your money either in real estate residential properties or commercial real estate property.
Now, you are ready to dig deeper into our main topic on commercial real estate vs residential real estate investing and what to choose. So, let us start by understanding more about residential real estate investment.
What is Residential Real Estate Investment?
The first step in choosing between commercial real estate vs residential real estate investing is understanding each of the two types.
Residential real estate investing is investing your money in a residential property. It focuses mainly on generating income from the properties used for the residential need only.
The thing that can be done in many ways, however, here we will focus on only two of those main ways of real estate residential property investment because they are the most relevant two in the Egyptian real estate market. Those two ways are rental investing and flipping houses.
Concerning rental investing, simply put, it implies buying a property and offering it for rent for a certain period of time with a certain rental price the thing that generates a high real estate return on investment(ROI) over time.
Whereas, speaking of flipping houses, it simply implies buying a residential property and either holding onto it for a certain period of time or renovating it with essential updates and reselling it. In both cases, the value of the property increases generating a high income.
You know understand both types but the question is, why invest in residential real estate properties?
Why Invest in Residential Properties?
We are only one step ahead of our main question of commercial real estate vs residential real estate investing but we need first to understand the benefits of residential real estate investment.
Deciding to invest your money in a residential property has major benefits such as:
- Generating high rental income and cash flow
- Being the property owner, you can decide who you want to rent your property to
- You can generate higher income when investing in single family homes for they are the most wanted now
- You have many investing options to choose from either the rent or the flipping process
- Dealing with residents is easier than dealing with business owners
You also need to take into consideration that choosing the right location to place the property you are going to invest in matters. You can know the top residential areas and the best ones for investment from this article: Know the Best Place to Buy Property.
Now, that we are done talking about residential investment, let us turn our heads to the investment in commercial real estate and the properties used for business.
What is Investing in Commercial Property?
We are now halfway from our main topic commercial real estate vs residential real estate investing since we have talked about residential investment so let us now know what it means to invest in a commercial building.
First of all, you need to know that investing in commercial properties implies investing your money in business / non-residential property with the purpose of generating a cash flow or income generation (by selling / leasing).
But, how to invest in commercial real estate? Commercial real estate investing implies buying a property or a space with the aim of renting or reselling it for commercial use which can be offices, retail stores, or medical clinics.
Now that you understand what is commercial real estate investment, let us proceed to our main topic of commercial real estate vs residential real estate investing but first, we need to answer one last question before answering this question.
Why Invest in Commercial Real Estate?
Investing in commercial real estate can be risky unless done right and among the countless benefits of commercial real estate investment, one can find:
- Consistent returns thanks to the rental income that is not affected by wther or not the business renting your space is generating profits
- Limited hours of operation, if the business renting your space is one that does not need to operate all day, then the operation hours of the space are limited which slows down its depreciation over time unlike the residential properties that are in use 24/7
- Professional relationships with the business owners who use your space that help you build a professional network
- Opportunity for business expansion, whenever you need to operate your own business, you would just stop renting your space and use for your own and it will be then, ready for use
- Passive income, as you can refer to a property management company that operates the business and manages the deal and you only get the profit without the need to be included in the hustle of details
By now, you almost know all the details and whereabouts of each of the residential and commercial real estate investments and we can finally answer our question on comparing commercial real estate vs residential real estate investing.
Commercial Real Estate vs Residential Real Estate Investing
Now, answering this question of commercial real estate vs residential real estate investing solely depends on your preference and goal behind investing.
You now know the pros and cons of each type of investment and you know all the whereabouts of each.
You can go for the residential real estate investment if you want a hassle-free process that generates high Roi.
Whereas, you can choose the commercial real estate investment if you want higher returns, a professional network, and a potential business space.
Did you decide now what you will choose from commercial real estate vs residential real estate investing?
Start Your Investment Journey Now!
By now, our article on commercial real estate vs residential real estate investing is over but we are sure your investing journey is just about to start.
Thanks to Nawy‘s property consultants team, you don’t have to face this critical choice on your own. You can just fill in the form below to find our team at your back providing you with all the information needed to make a well-informed decision.
Also, don’t forget that Nawy Shares offers you the best seamless and hassle-free investment options.
We wish you a wise choice between commercial real estate vs residential real estate investing and a successful investment journey.
