Saturday, February 4, 2017

Phoenix Real Estate Investing: Commercial or Residential Real Estate?

A big question for Phoenix real estate investing is whether to invest in commercial properties or residential. Each type of property is defined by different renter characteristics, required financing, and general pros and cons. So, which one is better?

Phoenix Real Estate Investing
Phoenix Real Estate Investing
A big factor for many new investors is the simple issue of finances. Commercial properties inherently require more money to buy into because the buildings are much larger and can be in high property value areas. As a result, if the investor is not backed by considerable means it will require a bank to heavily finance them. Because of the increased financing, and therefore risk, on the banks part, it can be difficult to secure a commercial real estate investing loan.

On the other hand, residential real estate is much less expensive. It is not uncommon for casual investors to save up for a few years and buy a property using moderate financing from the bank. As a result, most casual investors will begin in residential real estate. However, after being successful in the residential sector some choose to liquidate assets to focus more in the commercial market.
Phoenix Real Estate Investing
Phoenix Real Estate Investing

The other major question is which can produce higher profits. The simple answer is that commercial real estate can make more money. While Phoenix real estate investing is not really that black and white, commercial real estate typically has longer and more secure lease agreements that are funded by entities with more cash than the average residential property. Additionally, typically you will be hosting more entities in commercial real estate (think of an apartment complex) than a house, and therefore are simply receiving more checks than just the one.

1 comment:

  1. Before you buy that first property, or do your first analysis, determine what you expect from your investments. Also you should set your financial goals to become a successful investor. Housecashin