Commercial versus Residential Property

When it comes to property investment, there’s obviously one choice that must always be made. This choice is pretty much between residential or commercial property. Which option are you going to specialise in? For many budding investors, it’s a very difficult decision to come to, as there are undoubtedly advantages to either route, but here at Prideview Properties, we’re naturally going to be biased towards the commercial perspective, given our specialist status in the field of investment property in London. Here is a break-down of how commercial property differs to residential property, and why we reckon you should be going the commercial route...

The Cost

It almost goes without saying, but commercial property is obviously a more substantial financial commitment than dabbling in residential property would be. However, it’s not necessarily as ‘out of reach’ as many people would have you believe. For example, there are plenty of small or individual retail or office premises out there, and a fair few of these are perfectly comparable with residential prices. Whilst the very largest ventures – like shopping centres – need an unusual amount of cash to pursue, there are numerous opportunities at the lower end of the scale too.

The Lease

The lease on commercial property tends to be longer than residential property, but the latter often commands higher levels of voids as a result of this briefer tenure. The lease is different in other ways too, though, as certain clauses in commercial property agreements usually result in there being no scope for a decreasing rent value, so there is always some measure of protection in place.

In residential property arrangements, the tenant typically has little responsibility in terms of repair and maintenance, but in the commercial property industry this duty tends to lie with the tenant. This is a significant advantage in favour of the commercial property owner, as a large proportion of residential landlords find that their income is greatly drained as a result of maintenance costs. We’re not over exaggerating either, as 30% of residential property income can easily be lost in this fashion.

The Valuation

The valuation of commercial property is very different to the valuation of residential property too. In residential property, it’s very easy to compare house prices to get an idea of the prevailing trends, yet commercial property requires that you have an expert opinion. Of course, getting the help of commercial property consultants is never too difficult, as the Prideview team is always on hand to help, but you may still be wondering why commercial property would be our recommendation to budding property owners. Is it really worth it?

Why Commercial Property...?

In short, absolutely. No really, we mean it! The income from commercial property is far and away the superior performer in terms of pure return on investment, and when you’re dealing with property, that’s a massive factor to consider. If you want a stat, commercial property regularly yields 50% more in terms of income than residential property would, so as far as we’re concerned there’s no competition. That’s not to say that getting into commercial property is easy if you’ve no prior experience, but if you need a little help feel free to get in touch with our experienced team.

Not only can we give you all of the most up-to-date property advice, we can also offer you a range of superb opportunities to purchase commercial property as well, so with our help your investment venture stands the best possible chance of succeeding. To find out more, call 0208 863 8680 or email and we’ll be happy to assist you.

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