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Type of Real Estate Commercial vs Residential

Posted by kapoor Infra on September 8, 2021
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Type Of Real Estate:

There are many type of real estate, but today we are going to explain only 2 types of real estate, commercial and residential.

Many of us wonder what is the difference between commercial and residential real estate. So today we are going to put our opinion on this topic. As you know Kapoor Infra is one of your real estate guide.

So let’s discuss this topic together.

Before getting started, it is very important for us to know what is commercial and residential real estate.

So Let’s have a look at both terms and reveal what is contained in them.

Commercial real estate vs residential real estate

What is Commercial Real Estate?

Commercial real estate refers to those properties that are used for business purposes.

Commercial real estate deals with people trying to invest in properties to run their daily business operations.

Commercial real estate consists of 4 primary asset types, including:

  • Office
  • Retail
  • Industrial
  • Hospitality

If you break down the word “commercial”, you will get the word “commerce”.

Here are some pros and cons of investing in commercial real estate:

  1. High Entry Barrier:

There are many hurdles in the process of investing in commercial real estate, due to which no one can invest in commercial property quickly.

Like:
Commercial real estate needs more capital, and Commercial property also requires time to build, so investors have to be patient.

2. Long Time Return:

Commercial real estate is all about long term game, yes commercial real estate gives long term lease rentals. Commercial leases tend to be 3 to 5 years and it isn’t uncommon to see 15 or 20+ year terms!

3. Higher Profitability Potential:

When you invest in commercial property it is very clear from day one that you will get a certain amount of rentals for a particular period of time. It means in commercial real estate, you’re dealing with more rentable square footage, which equals more tenants and more rental income; means more profit.

Now that we have known about commercial property and its pros and cons, so let us now know about residential as well.

Residential real estate

What is Residential Real Estate?

Residential real estate is more about a standard of living than business. Residential property is everyone’s need. Residential Real Estate Investment in India is the basic need of everyone.

Residential real estate is classified as any complex with 1-4 units. This includes:

  • Single-Family
  • Condos
  • Duplexes
  • Triplexes
  • Quadplexes

Residential real estate is strictly for living purposes

Here are some pros and cons of investing in Residential real estate:

  1. Low Entry Barrier:

Getting a good home is difficult, but Getting home is easy. You must be thinking that what does this mean? let me make it simple.

A good home means a house that is comfortable according to the location. So it is difficult to get a good home but it is easy to get home.

Compared to commercial real estate, residential has a lower barrier to entry

Liveable homes are present everywhere, due to which their prices differ according to the location. And the home buyer can plan their home according to their location and budget.

2. Large Market Size

Everyone needs a roof over their head; hence, there are plenty of people looking to rent or buy a house.

Residential investors thrive because there is always someone somewhere

who needs a place to rent, as long as the price is right. And there are many services to help satisfy this huge prospect pool. Kapoor Infra is also one of them.

3. Lower Profitability Potential

In residential real estate finding the perfect tenant for our residential property that pays the rent we mean is hard to find, Because tenants have many choices to finalize a home that fits in their budget.

Now we have come to know about both commercial and residential real estate.

We are sure that our viewers will know the pros and cons of both and know which real estate term is right for them to invest in.

Now this question can also come to the mind of any of our viewers that Can residential property be used for business purposes?

So we also answer this question

If the zoning rules and the housing society management rules allow it, you can use or rent your residential property for commercial activity.

Once a property is marked as commercial property, it would be treated as a commercial property for all purposes, which includes paying more as property tax.

Thank you for giving us your valuable time.
Have a happy investing.

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