Triple Net Lease<\/strong> – The most ideal of all commercial estate leases is the triple net lease. In this agreement, all the incidental expenses are shouldered by the tenant.<\/li>\n<\/ul>\nOn a broader perspective, commercial properties may come as complex in terms of legalities and contracts but the above lease terms significantly reduce costs to the owner. Consequently, commercial properties may need property management to maintain the place if the agreement is not on Triple net lease. Businesses such as Walmart are usually on triple net lease. This is to have control of how they wanted to present their company to their market.<\/p>\n
As for residential properties, maintenance is usually taken care of by the owner. He\/she may just need the help of some utility professionals to keep the property in a good condition. As a consequence there residential property investing can place more stress on the investor\/owner of the property.<\/p>\n
However, in commercial properties, larger companies often have the luxury of using a property management\/maintenance company.<\/p>\n
In both two types of investing both properties require maintenance, however, larger organizations often have economies of scale working in their favor which leads to cheaper on-going property maintenance.<\/p>\n
Real Estate Tax and Allowances<\/h2>\n
Residential property tax depends on the value of the home. Usually, tax ranges from 0-4% of the property\u2019s value. While for commercial properties, tax is calculated based on its income and business category.<\/p>\n
A foreign individual owning commercial property can be taxed at 39% of his net income, On the other hand, the U.S and Foreign corporations are taxed at 35%.<\/p>\n
Opportunities and Potential ROI<\/h2>\n
The potential ROI for commercial properties ranges between 6% -12% while 1% – 4% for residential properties.<\/p>\n
Commercial properties are driven by the movements in the economy. Though risks are higher, many investors still take it because of the growth in income potential. After all, investment is a big gamble.<\/p>\n
Residential properties are driven by demand. So, with the right strategic location and other factors, your residential property can secure you a steady profit. But compared to the longer lease offered in commercial properties, security and growth can both be probably achieved.<\/p>\n
Value appreciation<\/h2>\n
Real estates\u2019 value appreciates over time but not at the same rate and factors. One of these factors is, In figuring out the value of a residential property, the average value of the real estates sold in the area is one of the basis.<\/p>\n
Commercial property value is determined by its income and cash flow. So some investors take advantage of this by pushing for bigger income and force the property\u2019s appreciation.<\/p>\n
Period of Uncertainty<\/h2>\n
Real estate owners\u2019 nightmare is when there\u2019s no tenant. Time is money so the longer the property is vacant the more opportunities are lost. At this rate, lease terms play a great role in comparing commercial and residential properties.<\/p>\n
Residential properties lease terms normally last for a year. Unless the tenant renews their contract, there\u2019s no guarantee for the next tenant. While in commercial properties, lease terms can last for at least 5 years.<\/p>\n
Comparing 5 years of income over a year\u2019s earnings can definitely give you a better look on which is favorable. But, you must also take into consideration that businesses are also prone to unforeseen situations such as bankruptcy.<\/p>\n
Peace of Mind<\/h2>\n
The world can give you all the reasons to pick an investment. But it\u2019s really depending on you as an investor. Your investment should be inclined with your personality and principles in life.<\/p>\n
Someone who loves numbers and black and white transactions may find it hard to stay in residential property investing. This is due to the fact that residential property investing is an emotional endeavor. The buyer or tenant\u2019s feeling about the place are taken into consideration.<\/p>\n
The same goes with an \u2018emotional\u2019 investor. He may never find the oy of his investment within the stricter rules in commercial property investing. Not to mention the 30 to 90 days leasing preparations between the owner and the business. In commercial property investing, a business that can add more value to the property will always seal the deal.<\/p>\n
It is advised to set your personal investment criteria and not just go with what others tell you.<\/p>\n
In a nutshell, if you\u2019re just starting in real estate investing, it\u2019s best to start with residential property for security.<\/p>\n
Once, you\u2019ve established the necessary knowledge then you may start with the bigger gamble in commercial property investing for growth.<\/p>\n
We hope this article helped you clear out the questions you have in real estate investing. If you recently started investing, we\u2019d love to know your experiences in the comments down below.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
A lot of investors are getting a chunk of their fortune in real estate investing like author Robert Kiyosaki writes about. However, there is a diverse opinion on what property type is best to invest in. If you\u2019re more into numbers and straightforward business, some investors may suggest that you take the commercial property path. […]<\/p>\n","protected":false},"author":1,"featured_media":2127,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,148],"tags":[],"_links":{"self":[{"href":"https:\/\/search4.homes\/wp-json\/wp\/v2\/posts\/2118"}],"collection":[{"href":"https:\/\/search4.homes\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/search4.homes\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/search4.homes\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/search4.homes\/wp-json\/wp\/v2\/comments?post=2118"}],"version-history":[{"count":1,"href":"https:\/\/search4.homes\/wp-json\/wp\/v2\/posts\/2118\/revisions"}],"predecessor-version":[{"id":2180,"href":"https:\/\/search4.homes\/wp-json\/wp\/v2\/posts\/2118\/revisions\/2180"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/search4.homes\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/search4.homes\/wp-json\/wp\/v2\/media?parent=2118"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/search4.homes\/wp-json\/wp\/v2\/categories?post=2118"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/search4.homes\/wp-json\/wp\/v2\/tags?post=2118"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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Maintenance<\/h2>\n