Real estate is anything that is in relation to the land or buildings which may be either residential or commercial or which includes any other small unit, and so the Real estate development means anything that is in relation to the development or construction of land or building like Malls, shopping complexes, schools, colleges etc.
However when it comes to deciding between commercial and residential property for investment, most of the buyers get confused, so it becomes very important go through both of these options and choose the one which gives you maximum return on minimum investment.
Before going through the pros and cons of both the options let us having a quick review on what actually they are.
Residential Real Estate
Commercial Real Estate
Commercial real estate includes those buildings which are mainly used for purpose of doing businesses. Factories, industrial malls, retail stores, shopping complexes, warehouses come under this category.
Now there are many factors which need to be addressed for determining the better option. Some of these factors are:
Now a day’s buying any commercial property requires a very high capital investment while in case of residential property buyer can borrow about 60 to sometimes 100 percent of the market price depends on the income of buyer and his credit history, so it plays an important role while deciding between commercial and residential property.
It requires less paperwork for buying or selling any residential real estate as in comparisons to commercial real estate. As well as in the case of securing loans from banks and other financial institutes it becomes much easier to do that. Also, the interest rates are very high for commercial real estate as compared to the residential one.
There will be minor or no tax benefits while buying any commercial real estate while it is not true in case of residential one. Taking home loans on residential real estate will earn you several tax benefits based on your incomes and giving you the considerable tax saving options.
A prime location is the deciding factor for the success of any commercial Real estate while buying it. But in case of a residential property that provides you an adequate infrastructure as well as some transport facilities will became advantageous because it attracts the interest of buyers.
National as well as Global Market Conditions
The future performance of your real estate investment primarily depends on the global as well as national level marketing conditions. Doing some research on current market rates and the recent trends will be an added advantage while buying any commercial or residential real estate. If the conditions are good and renting rates are low then the best option is to go for residential real estates and in case the interest rates are effectively high then choosing commercial real estate may gives you some handsome profit.