Investing in real estate has always yielded a strong return. Yet, with so many property types on the market, it can be hard to know what is best for you. From terraced homes to offices, getting the right property is paramount. In this article, we discuss commercial and residential property investments, highlighting the pros and cons of each.
The Pros and Cons of Residential Property
The beauty of a residential investment is that you earn income from two sources. The first comes from your rental income. Houses are almost always in demand, and though you may have some short periods where the property is vacant, with the right rental price you will be able to maintain a high occupancy rate.
Secondly, you will gain value from appreciation. This is the equity a house accrues over time. If well maintained, very few properties depreciate unless an area starts to have serious economic problems.
To make the most of this, investments need to be strategic. Look for areas that are currently undergoing regeneration or are seeing high levels of investment. You can check prices over the last six months to a year and try to forecast the demand or price rises. It may even be worth selling another investment property in an area that has stagnated to fund this. Websites like Sold.co.uk can provide a quicker cash offer route that allow you to move quickly. If this is not suitable, they can also offer a more traditional estate agent method without the fees of the high street. This provides an all-around better deal, letting you carry on with finding the right place for your next venture.
The Pros and Cons of Commercial Property
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Generally, commercial properties tend to have tenants for a long period of time. People don’t want to change business addresses often, so you will find them staying put for much longer than residential renters. You may also find multiple businesses in the same commercial venture, meaning recurring and steady incomes.
Commercial properties tend to be valued on their income potential, as opposed to gaining value from appreciation. This can be a blessing and a curse. Sell it when you have a glut of occupants, and you will get a high price, but in a downturn when rent is thin, you may find it hard to sell at all.
You can often manage maintenance costs easier in commercial property. Owners can hire management companies, haggle on contracts, and perform upgrades that may be subsidised. This can make the upkeep cost less than a residential venture. The website for JPMorgan.com has advice on how to reduce operating costs for commercial property.
In addition, a business is going to want to keep its premises in the best condition. This can be in contrast to tenants who may not fully appreciate a property if they have not been vetted correctly.
There are advantages and disadvantages to both options. It is also possible to be an investor in both, and is actually a great way to diversify a portfolio. Check finimize.com to see just how resurgent the UK property market is. Do your research, set a budget, and you can begin to consider your next investment.
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