Commercial or Residential? Part One

Whether you are a novice to Real Estate investing or a seasoned pro, it is important to understand the differences between Commercial & Residential Investments.  Both of these have their pros and cons. Let's take a look at residential in this post and talk about commercial in the next.

Residential

Every tenant wishes to occupy your investment home for a minimum of 5 years, pay rent on time and treat the home as if they own it themselves - right?   Only in a perfect world.   Many investors get headaches over the constant battle to keep quality tenants in their investment houses.  This is where Property Management comes in - and saves you!  Or, do they?  If you have a reputable PM taking care of your investment they most likely do a good job with all the little things you don't have time or want to do yourself.

The problem becomes the costs associated with bringing in a new tenant.  Did the previous occupant trash the place?  Sure, you retained your deposit... but is it enough to cover the damages?

So you only purchase homes that are new and in desirable neighborhoods - that's not going to guarantee the tenants will keep up on landscaping, carpet stains, broken windows, clogged drains.  If you are fortunate enough to be in a market where your rents are higher than average and you are getting paid on time - congrats!

Otherwise - take a look at the option of investing in Commercial Real Estate.  (In upcoming post.)