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3 Signs You Should Invest In Commercial Real Estate Vs. Residential Real Estate

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When you think about investing in real estate so that you can make a profit, you might think about buying and renting out houses or apartment buildings. However, in some cases, investing in commercial property is an even better choice. These are a few signs that this is something that you should consider.

1. You Have a Larger Amount to Invest

Although this is certainly not always true, in general, it's going to cost more to invest in commercial properties than residential properties. This means that if you're going to take this step, you're going to want to make sure that you have ample money to invest without putting yourself in a bad financial situation. If you are going to be financing the property, then it's important to be aware that underwriting can be more challenging for more expensive commercial properties.

2. You're Interested in Longer Leases

With residential properties, one-year leases are very common. However, six-month and even month-to-month leases are not uncommon. In fact, many residential tenants actually prefer shorter leases; some of them rent rather than buy homes strictly because they don't want to be tied down to one place for too long. With commercial leases, however, longer lease terms are usually the standard. This is because business owners typically aren't going to want to have to uproot their business and move elsewhere very often. If you like the idea of having the same tenant in place for a long time -- which can be a good thing if you choose the right commercial tenant, since you won't have to worry about vacancies or the costs that can go along with a turnover -- then you might prefer to rent out a commercial property.

3. You Want to Make More Money

Even though it can be challenging to find good commercial tenants, owning commercial property can be an excellent way to make more money. After all, depending on where the property is located, you could have the chance to charge high rental rates with no problems, which may not be the case with many residential properties. If you'd like to try an investment option that has a potential to bring in a lot of cash, commercial real estate might be the best choice for you.

Investing in commercial real estate might have its own challenges, but it can be a good opportunity, too, especially if you also invest in commercial property management. These are a few signs that this might be an investment option that you will want to look into.