3 Ways That Residential and Commercial Real Estate is Different

Property is one of the best investments that you can make, especially in the ever-changing market that we are in today. You might think that there are not that many differences between residential and commercial markets, but in fact, they require very different and completely unique approaches, so you might find that actually, one might be a better fit than that other. 

Making any type of investment can seem daunting, but when it comes to investing in property, it’s important to understand even just a handful of the differences between commercial and residential real estate before you part with your money. The two have very different markets and require different knowledge, experience and investment. Let’s take a look at 3 ways that residential and commercial real estate is different. 

Return on Investment

For new investors, commercial real estate may seem much more expensive to start with than commercial real estate. However, it continues to remain a popular form of property investment in that it tends to generate a much higher return on investment (ROI). Residential tenants may change more frequently, but commercial real estate tenants tend to sign much longer leases, meaning that this can provide you with a more steady income. 

However, this isn’t to say that residential real estate isn’t worth investing in. It’s far easier to find tenants for residential properties than it is commercial real estate, after all, people will always need somewhere to call home. 

Different Levels Of Upkeep

Residential properties are used 24 hours a day, 7 days a week, meaning that they are much more prone to wear and tear compared to commercial properties that are only used for a certain amount of hours per day and not over weekends. With residential properties, however, the problems that crop up over time will likely be much simpler and cheaper to solve with a simple call to an electrician or plumber. 

For commercial properties, property upkeep and maintenance tends to be more complex as the properties are usually larger and can house more facilities. In some cases, you may be legally required to provide property managers for your premises, which is an additional cost. Commercial properties may also require more regular maintenance works, such as pigeon guano removal and cleaning, gutter cleaning and high-level window cleaning. For your building premises, you may need to provide commercial cleaning in London, Manchester, Birmingham or wherever your business is based. 

The Buying Process

Perhaps one of the biggest differences when it comes to commercial and residential property is the buying processes required. Although it is considered one of the most stressful parts of your adult life, buying a residential property is relatively straightforward and has plenty of clear steps and requirements. The process for buying commercial property, on the other hand, can be a bit more complex. There are commercial real estate agents who can help you with the search, but you’ll find a lot more commercial properties will be available to buy through an auction as opposed to through a direct seller. 

You’ll need to apply and secure a business loan before purchasing commercial real estate and what a lot of people don’t understand is that there are a lot of extra costs involved with commercial real estate. If you are interested in buying a commercial property and aren’t too sure where to start, it’s best to seek out the help and advice of a commercial property agent.