4 Reasons to Invest in Commercial Property vs Residential



When you think of investing in property, you probably imagine purchasing houses before selling them on to happy buyers for a profit, or letting them out to tenants for a monthly rental fee. However, this isn’t the only type of property investment available; purchasing commercial properties such as shops, storage facilities and offices has grown in popularity in recent years. Here are just some of the main reasons why more and more property investors are choosing commercial property  over residential.

Reason #1. Better Tenants:
If you are already a residential property investor, then you’ve probably been in a situation where a tenant has called you at some ungodly hour, unable to get into their house or having discovered a leak or other problem. On the other hand, commercial property landlords don’t often deal with this issue – tenants are usually businesses with their own maintenance team, or at least only work normal business hours, so any calls you do get will be at a normal time of day. In addition, the landlord-tenant relationship for commercial properties tends to be much more professional and business-like.

commercial office space

Reason #2. Higher Returns:
In general, yields tend to be higher for commercial property when compared with their residential counterparts. In addition, commercial tenants often take on many of the costs that landlords would be traditionally expected to cover in the residential market, for example, providing insurance for the building and ensuring that it is adequately maintained. In addition, commercial tenants will often sign on for longer leases – some may even be happy to stay there indefinitely since it would cause them a lot of hassle to change their physical location. For landlords, this means a more reliable source of income.

Reason #3. Increasing Asset Value:
Historically, commercial real estate investments have provided excellent value appreciation rates, often not only meeting, but exceeding, other types of investments. In general, commercial properties tend to go up in value for a variety of different reasons, for example, new developments in the location bringing in more customers for any business in the property, or proactive management making cost-effective improvements to the property over time. As a result, commercial landlords can not only earn a profit from business lettings, but also from reselling the property in future. Follow the link for more information on net-leased property.

Reason #4. Unique Security Advantages:
When compared to residential property, investing in a commercial building is often far more secure an option. When you invest in commercial real estate, it’s not just the building itself that has meaningful intrinsic value; it also includes the land. As a property investor, choosing both the location and quality of your asset wisely when making the investment can lead to additional security; your asset will have the potential to generate a return regardless of what happens to the current tenants. It is for this reason that commercial real estate investments are less susceptible to fluctuation with the same volatility as the stock market, for example.

What are your reasons for considering a commercial property investment? We’d love to hear from you in the comments.

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