Investing in residential or commercial property

If you want to invest in property, then the first decision you have to make is whether to opt for commercial or residential property. What are the differences between these two types of property in terms of investment?

Below we explain the differences between investing in commercial and residential property, factors you need to consider such as tenant demand and prices, and what may be the better option for you and your business.

Residential property

When looking to invest in residential property, also known as buy to let, there are many factors to consider. Firstly, location is a huge factor. You need to check the current market, see what houses are selling for in that region, and work out the rental value. In today’s current economic market, you can get more for your investment by renting out your chosen property. Today there is great demand for housing due to the lack of affordable housing, higher prices, and the fact that many individuals are unable to get onto the housing ladder.

You do need to be able to spend time on your chosen property, more so than in the commercial sector, because of landlord obligations and the shorter lease time. However, you will see a greater return on your investment and regular payments.

Commercial property

When it comes to investing in commercial property you really need to enlist the services of a professional, as this is when things can become a little bit complicated. Many individuals start off in residential property and then progress into the commercial sector, so ideally only go down the commercial property route if you have years of experience in property investment.

Starting off you are best to consider commercial property such as small shops and offices. However, there can be a huge variation in value and it can be difficult to gain a fair valuation price, hence the need for professional input. There are so many rules and regulations that surround commercial property, and the type of mortgage and lease that is required. This fact, coupled with the current market, makes commercial investment risky. If a shop or business goes bust, then you could find yourself in very deep financial water.

Summary

Property investment refers to both time and money. You need to think carefully about what is right for you. Commercial investment needs a high skill level, experience and knowledge about leases, tax and business plans. Residential investment is often more straightforward, with a guaranteed monthly income, but you do need to put the time and effort in to reap those rewards.

To learn more about residential property development with Blackmore Homes, then please do browse our website and get in touch.