Looking to invest in real estate? Well, you need to know the advantages of commercial Vs residential real estate investing. Go through this blog to get an idea of the same.
Real estate has always been one of the most viable investment options of all time. Not only is the price of real estate always high, but the rent that a property can generate is also quite high. If you are thinking about investing in a real estate property and are confused as to whether commercial or residential real estate would suit you, then you need to go through this blog. This blog is an attempt to give the in and out of commercial Vs residential real estate investing.
Difference Between Commercial and Residential Real Estate in Chennai
|Residential real estate||Commercial real estate|
|1. Residential real estate is a housing unit primarily used for residential activities||1. Commercial real estate properties are used for carrying out business activities.|
|2. Individual houses, apartments, penthouses, and bungalows are a few examples of residential real estate||2. Office spaces, shops, retail spaces, industrial spaces, hospitals, etc., are a few examples of commercial spaces.|
|3. It has a return of investment of 4 to 10%, and this differs as per the geographical area.||3. Commercial real estate property has a return of investment of 6 to 12%, and this differs as per the property type.|
|4. When a residential property is rented out, the cost of maintenance is managed by the property owner||4. According to triple net leases, maintenance and operating expenses are managed by the tenants.|
|5.220 sq. ft of a residential apartment space can be made use of for commercial activities.||5. Commercial spaces can never be used for residential.|
Fun Fact: It is found that 73% of the people would still buy a house if they knew it was haunted and that shows the value of a residential property.
Real Estate Property Investments
Real estate investments have always been the most reliable and constant way of investment. Before we can analyse commercial vs residential real estate investing, we need to know how real estate investments are of aid. There are two popular ways by which real estate investment and the returns take place.
1. Property appreciation is one of the most common and popular ways of generating income. When you sell a property, the property’s appreciation value would be increased by multifold compared to the time of purchase.
2. Many investors thrive on rents and leases of residential and commercial property. Rental returns are yet another best source of revenue and one of the most notable ways of providing consistent returns. This is yet another best example of real estate investment.
Residential Real Estate
Residential real estate properties are mostly housing units used for residential purposes. Residential properties are long term investments for those looking to settle down in a place. Residential real estate properties that are of multifamily nature are used for business purposes as well.
Types of Residential Real Estate Properties
- Individual houses
Advantages of Investing in Residential Real Estate Property in Chennai
1. Residential real estate is one of the most prominent investments for those willing to get a long term place for themselves. A residential property in the prime hub of the city is a good investment for the long run and holds a greater appreciation and resale value.
2. Chennai has the highest number of migratory workers, and there is always a need for residential stays in Chennai, no matter the area. This provides a guaranteed flow of cash flow and returns of investments to those willing to rent out/ lease out their residential properties.
3. There is an area of residential property that is being made use of for commercial purposes as well. This comes in handy for those willing to carry out commercial activities within their residential spaces.
It is stated that one can make use of nearly 220 sq. ft of a residential apartment space for commercial purposes.
4. The tax exemption benefits enjoyed out of residential real estate property are great. There are no direct taxes or GST compliances involved in a residential property. Rental taxes can also be subject to Qualified Business Income, which is taxed at a much lower rate than ordinary income. This makes residential real estate investment in Chennai the best as one can save up a lot.
5. As the cost of living and the economic conditions of the location and neighborhood increase, the value of the residential property along with the land increases as well. This guarantees a high appreciation value for a property.
Commercial Real Estate
Commercial real estate property, as the name itself suggests, is used for commercial purposes. Commercial real estate properties are made the best use of to carry out businesses within the prime hubs of the city. They are primarily designed for carrying out business activities related to profit generation.
Types of commercial real estate property
- Office spaces
- Retail spaces
- Multifamily buildings
- Industrial spaces
- Hospitals, hotels, malls and etc.
Advantages Of Investing in Commercial Real Estate in Chennai
1. Chennai being one of the topmost metropolitan cities, is known for its trading and business activities. Investing in a commercial real estate property in Chennai is the best investment that you can make for now and generations to come.
2. If you want a steady flow of ROI, then there is nothing better than renting out commercial property. In Chennai, there are numerous businesses popping out every now and then, and there is no better way to generate good and consistent income than renting out spaces for businesses.
3. The rental gains that are derived from a commercial real estate property are much higher than the rental gains from residential property. This is one of the biggest factors to consider when you think about commercial Vs residential real estate Investing.
Commercial properties in general provide an average rental ROI of 8 to 11%. This is higher by multitude of levels than the rental ROI of residential property. The rental yield of residential property is 1.5 to 3.5 %.
4. Triple net leases are one of the biggest advantages of investing in a real estate property. When a commercial property is leased out, according to the triple net lease, the tenants are subject to take care of and pay all the property expenses like building insurance, property taxes, maintenance cost and more. Thereby, the investors save up a lot of costs involved in the maintenance of the property.
5. With regards to commercial real estate value, it is guaranteed that the appreciation value of the property will definitely continue to rise in a multifold of ways as the businesses and standard of livelihood of the area increase.
When you consider Commercial Vs Residential Real Estate Investing, analyse the above pros of commercial real estate as they are high-profit yielding.
The above is the gist and an idea of commercial vs real estate investing in Chennai.Both have their own advantages, and it depends on what exactly you are looking for to bring to a conclusion investing in which property would choose you. If you are planning to invest in real estate, then Tulive GK Shetty can be the right choice.
Why Invest in Tulive GK Shetty?
- Tulive GK Shetty’s properties are located in the prime locations in the city and come with premium facilities
- The buyers are promised of guaranteed on-time delivery, and they get access to dedicated customer support.
- All the projects are CMDA and RERA approved.
- Tulive GK Shetty has 1000+ happy clients, and there is no compromise on the quality.
The above blog is an attempt to convey the benefits of commercial vs residential real estate investing in Chennai. If you are planning to invest in real estate, no matter commercial or residential, Tulive GK Shetty can be the right place for you to venture into. If you have any suggestions or queries, let us know in the comments below.