The commercial real estate market differs slightly from the residential real estate market in certain key ways, and understanding those differences before making your investment decisions can help you choose the right property for you.
While both commercial and residential real estate involves properties and land, one is more geared toward businesses, while the other is more oriented toward residential use. There are also other differences between commercial and residential real estate as well. In this article, skilled real estate investor Rafi Toledano explores these differences and outlines some of the best uses for each type of property.
What is Commercial Real Estate?
Rafi Toledano explains that commercial real estate refers to property that is used for businesses other than the owner’s residence. These can be retail stores, restaurants, hotel rooms, offices, and other types of commercial use.
Commercial real estate investors can purchase any property, from a small storefront to large office buildings and hotels, that is situated in a central, populated area and that is ready to be leased to businesses. There are a number of reasons why commercial real estate makes a great investment, including the fact that it is an easily tradable asset, and some properties are regularly purchased by investors as an alternative to retirement plans.
What is Residential Real Estate?
The residential real estate market involves purchasing residential property for your own, personal use. This can include a single-family home, condominium, or house in a condominium complex. Purchasing residential real estate can be a very profitable investment, as the value of your property will likely rise over time, and it is a good alternative to a retirement plan. Rafi Toledano has a portfolio of approximately multi-family 20-buildings.
Differences Between Commercial and Residential Real Estate
According to Rafi Toledano, there are several key differences between a commercial and residential real estate that investors should consider before deciding between the two. Commercial real estate will likely be more expensive per square foot, due to having a dedicated use, such as a retail store, whereas residential real estate is usually less expensive, and has a slightly reduced capacity for growth and expansion. Commercial real estate also exposes investors to a wide range of uses and locations, whereas residential real estate is more focused on a single type of use, such as homes.
When Should You Invest in Commercial Real Estate?
There are several key reasons why commercial real estate is such a great investment for many investors. First and foremost, real estate is a flexible asset, meaning that it does not involve the same essential economic factors that can impact stocks and bonds, such as interest rates and market volatility.
Commercial real estate is also a great place to invest if you’re looking for a stable, long-term investment. Plus, it is an easy way to diversify your portfolio.
When Should You Invest in Residential Real Estate?
Investing in residential real estate can be a great way to make money when the market is low, as an alternative to saving for retirement, or as a way to shelter your assets from inflation. There are also a number of reasons why residential real estate is a great investment in general.
First and foremost, residential real estate is a great way to make money, as it is a stable, long-term investment. Toledano, who prefers investing in residential real estate, indicates that this type of real estate also tends to be less volatile than commercial real estate, and is a good way to store your assets during inflationary times.
Real estate is a very volatile asset type and is not without risk. Before putting your money into commercial real estate, make sure you are comfortable with the level of risk involved, and that it is right for you. Real estate can be a very profitable asset, but it is not for everyone. Rafi Toledano recommends that before investing in real estate, you should make sure you are comfortable with the level of risk involved and that it is right for you. For more information on the real estate industry, follow Rafi Toledano on Facebook.