Your home likely comes to mind when you think of real estate investing. Real estate investors can choose many other investment options, and they aren't all residential.

During the last 50 years, real estate has become an increasingly popular form of investment. If you’re considering investing in real estate, where should you put your money? Commercial real estate or residential real estate? Here's a quick comparison of the two options to help investors decide the right one for them.  

What Is The Difference Between A Residential And Commercial Property?

There is a distinct difference between residential and commercial properties. 

Residential property refers to any property with one to four residential units, such as a single-family home, townhome, or condominium. Commercial buildings include apartment complexes, industrial spaces, hotels, malls, shopping centers, and office spaces. 

Commercial leases are longer than residential leases; the latter often last for a year, while the former can run for several years. 

Additionally, the lien laws are far less stringent on commercial properties than residential ones. Residential real estate purchases are also simpler than commercial purchases.

Benefits Of Commercial Real Estate Investing

Investing in commercial real estate has multiple benefits. It provides;

1. 1. A steady cash flow
2. 2. Diversification and a dependable source of income
3. 3. Tax benefits
4. 4. The returns on commercial real estate investments are solid over time and tend to have a low correlation to other investments, making it an attractive option for diversifying a portfolio. 
5. 5. Real estate is a tangible asset that can provide an inflation hedge
6. 6. The potential to leverage debt for greater returns
7. 7. Tax advantages are also plentiful for commercial real estate investors, including deductions for depreciation and write-offs. 
8. 8. With careful planning and research, investors can maximize the potential of commercial real estate investments.

Benefits Of Residential Real Estate Investing

Investing in residential real estate can provide;

1. 1. A steady income
2. 2. Great returns
3. 3. Long-term security
4. 4. Tax advantages
5. 5. Diversification of income sources
6. 6. The ability to leverage funds
7. 7. Protection against inflation
8. 8. The potential to build equity when a homeowner pays their mortgage every month
9. 9. Investors have the ability to purchase real estate for less than market value, making it an even more attractive investment.
10. 10. Real estate is also improvable, allowing investors to add value to their properties over time.
11. 11. Real estate provides one of the most tax-advantaged asset classes available. 

All these benefits make residential real estate investing appealing to many investors.

Choosing Between Commercial And Residential Real Estate

Choosing between investing in commercial vs. residential real estate can be challenging. The return on investment of commercial properties is higher, and they are also easier to add value to. Unlike commercial properties, residential real estate offers more assets and can be owned by a sole proprietor. Before making a decision, investors should determine which option is best for their goals and financial situation.