Residential vs. Commercial Real Estate Investing?
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Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votesQuote from @Ken M.:
Quote from @Henry Clark:
OP commercial can be many types of investments. Most of the bad noise right now is about downtown skyscrapers and REIT or Syndication apartment complexes where they played short term versus long term interest rates wrong. Other commercial and industrial is fine.
13 Replies
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1yCommercial real estate is headed for a huge retrenching in 2025. Residential at least has a chance of being profitable.
Quote from @Tove Fox:
What are the pros and cons of each when compared? Thank you!
- Member since 2019 · 5 posts · 2 votes1y
@Ken M. - Why you think commercial will head for huge retrenching?
Residential Real Estate Investing
Pros:
- Lower Entry Costs: Easier to get started with less capital required.
- High Demand: People always need homes, making demand relatively stable.
- Easier Financing: Mortgages are generally easier to secure with favorable terms.
- Simplicity: Easier to understand and manage, especially for beginners.
- Flexibility: You can use it as a personal residence or rent it out.
Cons:
- Tenant Turnover: More frequent turnover leads to vacancy and more management.
- Lower Cash Flow: Income potential can be modest compared to commercial properties.
- Emotional Buyers: Residential prices can be influenced by emotions, leading to price volatility.
- Maintenance Burden: Landlords often deal with repairs and maintenance, which can be time-consuming.
Commercial Real Estate Investing
Pros:
- Higher Income Potential: Stronger cash flow and higher returns are common.
- Long-Term Leases: Tenants often sign longer leases (3-10 years), reducing vacancy risk.
- Professional Tenants: Business tenants tend to take better care of the property.
- Valuation Based on Income: Prices are based on the income the property generates, not market emotions.
- Shared Costs: Tenants often cover property expenses like taxes, insurance, and maintenance (via triple-net leases).
Cons:
- High Entry Costs: Requires more capital or partnerships to get started.
- Complex Management: More expertise is needed; you may need a professional property manager.
- Economic Sensitivity: Commercial properties are more sensitive to economic conditions.
- Challenging Financing: Securing financing can be harder, with stricter terms and higher interest rates.
- Zoning and Legalities: More complex regulations compared to residential properties.
Key Differences:
- Risk: Residential tends to be lower risk, while commercial offers higher rewards but with greater risk.
- Management: Residential is easier for DIY investors, while commercial properties usually require a team.
- Scalability: Commercial properties are easier to scale, offering more potential for significant cash flow increases.
- 1yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
OP commercial can be many types of investments. Most of the bad noise right now is about downtown skyscrapers and REIT or Syndication apartment complexes where they played short term versus long term interest rates wrong. Other commercial and industrial is fine.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1yHmm, what didn't you leave out? Building Fire Stations?
Quote from @Henry Clark:
OP commercial can be many types of investments. Most of the bad noise right now is about downtown skyscrapers and REIT or Syndication apartment complexes where they played short term versus long term interest rates wrong. Other commercial and industrial is fine.
- 1yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votesLooks like your near San Antonio. Just made $800,000 profit south of you in Floresville and La Vernia in commercial property. Instead of being a wise axx. Get busy making money.
Quote from @Ken M.:
Hmm, what didn't you leave out? Building Fire Stations?Quote from @Henry Clark:
OP commercial can be many types of investments. Most of the bad noise right now is about downtown skyscrapers and REIT or Syndication apartment complexes where they played short term versus long term interest rates wrong. Other commercial and industrial is fine.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1yCute comment, but it begs the questions:
Quote from @Henry Clark:
Looks like your near San Antonio. Just made $800,000 profit south of you in Floresville and La Vernia in commercial property. Instead of being a wise axx. Get busy making money.Quote from @Ken M.:
Hmm, what didn't you leave out? Building Fire Stations?Quote from @Henry Clark:
OP commercial can be many types of investments. Most of the bad noise right now is about downtown skyscrapers and REIT or Syndication apartment complexes where they played short term versus long term interest rates wrong. Other commercial and industrial is fine.
So tell us, how did you make $800,000 in profit in commercial. Why'd you sell if it's so profitable? What was the interest rate and when you went to refinance what rate were they offering? Could you even get finacing? - 1yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
Quote from @Ken M.:
Cute comment, but it begs the questions:Quote from @Henry Clark:
Looks like your near San Antonio. Just made $800,000 profit south of you in Floresville and La Vernia in commercial property. Instead of being a wise axx. Get busy making money.Quote from @Ken M.:
Hmm, what didn't you leave out? Building Fire Stations?Quote from @Henry Clark:
OP commercial can be many types of investments. Most of the bad noise right now is about downtown skyscrapers and REIT or Syndication apartment complexes where they played short term versus long term interest rates wrong. Other commercial and industrial is fine.
So tell us, how did you make $800,000 in profit in commercial. Why'd you sell if it's so profitable? What was the interest rate and when you went to refinance what rate were they offering? Could you even get finacing?Not a cute comment. Just responding to your negative comment. Commercial and industrial are many types of investments. If you personally are having trouble making a profitable deal, make a post and ask for suggestions. The OP asked a direct question. The great thing about BP there are different people with different perspectives and experiences.
You can read the full story in our self storage post for that location. Read through our deals 1 thru 14 and let me know if you have any questions.
Your in or near San Antonio. There is a $2mm profit deal near New Braunsfel. A $1mm profit deal in San Antonio.
.
Your in Texas. The greatest property tax sale state. $10,000 and sale for $50,000. $8,000 sale for $200,000. - Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1yI'm glad you're having a good time. Ken McElroy, Kiyoski, Bloomberg, Blackrock and the Fed should all ring you up and take some advice from you. ;-)
Quote from @Henry Clark:
Quote from @Ken M.:
Cute comment, but it begs the questions:Quote from @Henry Clark:
Looks like your near San Antonio. Just made $800,000 profit south of you in Floresville and La Vernia in commercial property. Instead of being a wise axx. Get busy making money.Quote from @Ken M.:
Hmm, what didn't you leave out? Building Fire Stations?Quote from @Henry Clark:
OP commercial can be many types of investments. Most of the bad noise right now is about downtown skyscrapers and REIT or Syndication apartment complexes where they played short term versus long term interest rates wrong. Other commercial and industrial is fine.
So tell us, how did you make $800,000 in profit in commercial. Why'd you sell if it's so profitable? What was the interest rate and when you went to refinance what rate were they offering? Could you even get finacing?Not a cute comment. Just responding to your negative comment. Commercial and industrial are many types of investments. If you personally are having trouble making a profitable deal, make a post and ask for suggestions. The OP asked a direct question. The great thing about BP there are different people with different perspectives and experiences.
You can read the full story in our self storage post for that location. Read through our deals 1 thru 14 and let me know if you have any questions.
Your in or near San Antonio. There is a $2mm profit deal near New Braunsfel. A $1mm profit deal in San Antonio.
.
Your in Texas. The greatest property tax sale state. $10,000 and sale for $50,000. $8,000 sale for $200,000. - 1yBasit SiddiqiBusiness MemberAccountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
Quote from @Ken M.:
I'm glad you're having a good time. Ken McElroy, Kiyoski, Bloomberg, Blackrock and the Fed should all ring you up and take some advice from you. ;-)Quote from @Henry Clark:
Quote from @Ken M.:
Cute comment, but it begs the questions:Quote from @Henry Clark:
Looks like your near San Antonio. Just made $800,000 profit south of you in Floresville and La Vernia in commercial property. Instead of being a wise axx. Get busy making money.Quote from @Ken M.:
Hmm, what didn't you leave out? Building Fire Stations?Quote from @Henry Clark:
OP commercial can be many types of investments. Most of the bad noise right now is about downtown skyscrapers and REIT or Syndication apartment complexes where they played short term versus long term interest rates wrong. Other commercial and industrial is fine.
So tell us, how did you make $800,000 in profit in commercial. Why'd you sell if it's so profitable? What was the interest rate and when you went to refinance what rate were they offering? Could you even get finacing?Not a cute comment. Just responding to your negative comment. Commercial and industrial are many types of investments. If you personally are having trouble making a profitable deal, make a post and ask for suggestions. The OP asked a direct question. The great thing about BP there are different people with different perspectives and experiences.
You can read the full story in our self storage post for that location. Read through our deals 1 thru 14 and let me know if you have any questions.
Your in or near San Antonio. There is a $2mm profit deal near New Braunsfel. A $1mm profit deal in San Antonio.
.
Your in Texas. The greatest property tax sale state. $10,000 and sale for $50,000. $8,000 sale for $200,000.There is nothing false wiih what @Henry Clark said.
Commercial real estate is broad - Office space, self-storage, Farm, Data centers, residential properties above 4 units, etc
It can be true that one part of commercial real estate is suffering while others is thriving.
Basit Siddiqi CPA4.979 Reviews - Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes1y
Quote from @Basit Siddiqi:
Quote from @Ken M.:
I'm glad you're having a good time. Ken McElroy, Kiyoski, Bloomberg, Blackrock and the Fed should all ring you up and take some advice from you. ;-)Quote from @Henry Clark:
Quote from @Ken M.:
Cute comment, but it begs the questions:Quote from @Henry Clark:
Looks like your near San Antonio. Just made $800,000 profit south of you in Floresville and La Vernia in commercial property. Instead of being a wise axx. Get busy making money.Quote from @Ken M.:
Hmm, what didn't you leave out? Building Fire Stations?Quote from @Henry Clark:
OP commercial can be many types of investments. Most of the bad noise right now is about downtown skyscrapers and REIT or Syndication apartment complexes where they played short term versus long term interest rates wrong. Other commercial and industrial is fine.
So tell us, how did you make $800,000 in profit in commercial. Why'd you sell if it's so profitable? What was the interest rate and when you went to refinance what rate were they offering? Could you even get finacing?Not a cute comment. Just responding to your negative comment. Commercial and industrial are many types of investments. If you personally are having trouble making a profitable deal, make a post and ask for suggestions. The OP asked a direct question. The great thing about BP there are different people with different perspectives and experiences.
You can read the full story in our self storage post for that location. Read through our deals 1 thru 14 and let me know if you have any questions.
Your in or near San Antonio. There is a $2mm profit deal near New Braunsfel. A $1mm profit deal in San Antonio.
.
Your in Texas. The greatest property tax sale state. $10,000 and sale for $50,000. $8,000 sale for $200,000.There is nothing false wiih what @Henry Clark said.
Commercial real estate is broad - Office space, self-storage, Farm, Data centers, residential properties above 4 units, etc
It can be true that one part of commercial real estate is suffering while others is thriving.Where is it that I said what he said was false? CPA's should be more careful on details. Mistakes and miscommunication cost people money.
I did ask him to explain his transaction, not an uncommon request, but he has failed to answer it.
"So tell us, how did you make $800,000 in profit in commercial. Why'd you sell if it's so profitable? What was the interest rate and when you went to refinance what rate were they offering? Could you even get financing?"
Not answering a legitimate question, when making a claim, can be self serving and can lead people to believe the claim is false. - Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes1y
Quote from @Tove Fox:
What are the pros and cons of each when compared? Thank you!
I'd say the logical paradigm in the question is a bit off.
CRE includes everything from airports to golf courses to hospitals to campgrounds.
So saying "residential versus commercial" is like saying "bacon versus plant life."
Are we comparing bacon to Christmas trees, to apples, to venus fly traps, to tomatoes, to grapes, to kelp? What does the question even mean? Bacon is more yummy than a Christmas tree, but I bet I'm going to have a whole lot less regulation growing Christmas trees... however, before we even get to that, it's necessary to know that the inquiry is even about bacon v Christmas trees, rather than Bacon v grapes.
- Real Estate Agent · Plano, TX · Member since 2015 · 734 posts · 511 votes1y
I just posted a YouTube video about just that recently :-)
- Investor · Orange County, CA · Member since 2014 · 363 posts · 408 votes1y
BRRRR is much easier doing commercials. I started with multifamily but price expectations have gotten out of control.
Just refinanced my multi-tenant retail property and pulled out much more cash than I put in.
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