Are you planning to make a real estate investment but are not sure which option to go for between commercial real estate and residential plots? Check out some of the aspects we’ve analysed to help you draw a comparison and make a decision.
It is imperative to understand that the commercial properties are usually a little higher in cost when compared to the residential properties. However, since the costs are higher, they will definitely yield better returns. Although the returns on residential properties would also improve if you make a long term investment, but it wouldn’t be equivalent to the returns you get from an investment in the commercial spaces.
So if you are comfortable making that additional investment at the initial level, the commercial property is an option to consider.
There could be various reasons behind investing in a property. You may want to simply make an investment that would yield you great returns in the future, or you would also want to draw some rent from the property by leasing it out. So make sure you are clear about the purpose of your investment.
If you pick a residential space, you would always have an option to use it yourself whenever you want. But you’d rarely see people buying office spaces or other commercial spaces for immediate use as it involves a lot of complexities.
Also, if you lease a commercial space, you’d get guaranteed income from it for at least a few years. In most of the cases, the lease keeps renewing at improved rates and you won’t have to look for new tenants regularly.
If your investment is for a shorter duration, buy a commercial property as it would give you better and quicker returns. But in case you are willing to take it slow, pick a residential property such as villa projects in Frisco, Texas in a good locality as its rates will splurge slowly but in a steady manner.
The commercial properties would always offer you a more stable and predictable income in the long term. Also with the multi-year leasing benefits, commercial spaces offer you long term rentals, which makes them way less risky investment in comparison to the residential spaces.
In the case of residential spaces, the tenants keep changing frequently, the costs of maintenance are high and the returns are slow low, which makes it a riskier investment.
There are a few tax benefits associated with an investment made on a residential property under the Section 80C and Section 24 of the Income Tax Act in India. So if you buy a residential property and take a loan on it, you can get a rebate in the tax you pay.
You should know that the income earned by renting both the commercial as well as residential property is taxable.
In addition to the aforementioned factors, also consider the aspects that support your personal preferences and goals. For a fact, real estate investments you make in best villas in Frisco, Texas are hefty. So make sure you are absolutely sure and confident about the decision that you make.