Residential units only have traditionally been considered a good option for investment in real estate. However, with changing times and trends people are realizing the viability of investment in commercial spaces as well. In fact, many developers and experts from the real sector are of the view that commercial properties pays better return as compared to the residential properties.
For any investor, there are two most important things that need to be considered: return on investment and initial cost of acquisition. Many developers who used to sell larger office spaces are today dividing those larger floor plates into smaller units. Today, a small investor can even look at buying 500 square feet to 1,000 square feet of office space and that is bringing in a lot more new categories of buyers. This is the reason why professionals like stock brokers, lawyers, chartered accountants and even doctors investing in office properties across the country to gain better returns from their real estate investment.
A few benefits of investing in commercial properties
- The cash flow is generally higher with commercial real estate. The yield is often higher per square foot and on an initial investment basis than it is in residential. Moreover, if you lease or rent a multi-unit commercial property, an owner can have more tenants than a single residential house and would generate more income.
- Commercial real estate leases are generally much longer. This way the owner has stability of the cash flow for a longer period.
- The valuation of commercial properties is done differently. The income that a piece of commercial real estate produces is directly related to its usable square footage. This is not always true with the residential properties.