Reasons for Switching To Commercial from Residential Real Estate

With economic instability and fluctuations that routinely happen in stock market, one can expect some bad times ahead regarding businesses. Especially, the real estate business situation may worsen to a certain degree. Affordability issues can leave bad influence on the real estate. In this scenario, we cannot advise anyone to leave the real estate business and do something else. There are some great alternates within the real estate industry that can help investors to get consistent cash flow even in the bad days. For instance, you can consider investing in commercial real estate rather than focusing entirely on investing in residential real estate.

Commercial real estate can provide better ROI

The simple reason behind better ROI from commercial real estate as compared to residential properties is that you are going to rent out your property to the businesses rather than individuals. The general affordability during recession may restrict the individuals to shift to cheaper residential properties but businesses are more likely going to stay, unless they are hit by serious financial blows. Furthermore, the real reason for better ROI from commercial real estate is that you are going to get better rent and you will not need to do extensive repair works, which are normally required in the residential real estate.

Guaranteed income

Of course there is nothing guaranteed in any business, but there are some commercial real estate investments that have much better chances to produce returns. For instance, you can almost always get consistent income from self-storage units. People need to store their bulky items somewhere for any reasons. So they prefer self-storage units. This is the reason that there are many storage units working across the United States.

Sometimes, the bad market situation can actually be beneficial for the storage businesses. Foreclosures, home sales and overhauling become common practices in the days of bad economy. In that period, the self-storage units provide people with the option to store their items they would carry after emptying any property.

There is no time when demand for a self-storage business isn’t high. It means that there is very little chance for a self-storage unit to sit totally vacant.

You can increase the value of your property

When you invest in the residential property, the only chance you get to increase the value of your property is when the values of properties in neighborhood rise. It means that any kind of heavy renovations and top-class upgrades fail to make substantial difference. You will need to depend upon the increase in amenities that are developed in community.

Commercial real estate, on the other hand, makes more sense because any upgrade or renovation in the property can attract bigger businesses. This way, you can rent out your property at much higher rate, and you will not have to worry much about the commercial properties in the neighborhood.

 

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