Commercial vs residential

6 Replies

Hello BP this is kind of a 2 part questions

  • 1.I am digging though all the feeds and trying to wrap my head around the whole real estate investing formula. I keep coming to the conclusion that I want to invest into Residential properties singles family, multi family and eventually work myself into apartments. One thing that keeps coming to me in the back of my brain is the question “What about Commercial?” know correct me if I am wrong but itsnt apartment building considered “commercial” Has anyone done actual commercial real estate investing and if so is there a better return on them vs residential?
  • 2.I love seeing the idea of 10k a month in cashflow but my mind is thinking BIGGER & BIGGER so is there investors on here that are doing more than that? My plan is for 25k+ in cashflow do you see this possibility? If so more residential or commercial or a mix of both?

Any advice would be great thanks BP community I truly love this site! 

Good questions @Phillip Gonzales  . 

1. I'm not 100% on what differs apartment and commercial. I think commercial just deals with business establishments. Not too sure so I'll be following this posting. 

2. Honestly speaking, your monthly income is dictated by your work ethic. Whatever you do to get to 10k a month, just rinse and repeat until you get to 25k or whatever your heart desires. 

The sky is the limit. Rinse and repeat, rinse and repeat... 

All the riches on this earth are equally entitled to each and every single one of us, its just the trip getting there where people quit.

Best of luck on your journey. 

Hi Lorenzo, I would've thought apartments or multi-family properties were residential but for tax purposes a certain number of units qualifies the building as a commercial property along with office buildings, retail, restaurants and industrial.

When dealing with personal living spaces, distinction between residential and commercial arises from a definition by {I believe} HUD in the U.S.A. and CMHC in Canada that classifies 1-4 family properties as residential (attached or detached). Buildings of 5 units, or more, are classified as commercial.

@Chaz Reid  @Shezira R.  

 yes anything over 4 units is considered commercial. I was thinking where bigger profits are made vs smaller ones are. 

I would definitely think the larger amount of passive income would come from commercial but you have to spend more to acquire a large piece of property. 

1) Typically, I thing anything that is not 1-4 unit residential is considered commercial.
I based that off what a typical commercial broker would offer as I see listings on Loopnet. You can search for office, retail, mutlfamily (over 4), etc. 

2) In terms of what makes more money and finding something that will earn more than 25k a month in net cash flow, I think you have to put that question into some sort of context.

Here's the thing. If you had a million dollars, it would be easier to invest that into commercial and make more income than if you had 50k to play with.

Some of us, myself included, would have loved to go to commercial but the price of poker there is just too high. I don't have 300k to buy a million dollar property so I could make 100k a year or maybe I would.

If you have that kind of money, then I would suggest you look to commercial. You can get to your cash flow numbers much quicker that way. Doing it via SFH's is either going to take quite some time or else you're going to have to be incredibly busy - if your intent is to generate 25k a month net cash flow. :-)

The key here is how much money do you have to start? Thats going to dictate quite a bit on what sandbox you can play in. I know there are some exceptions to that rule where some people have picked up 10 to 20 unit apartment complexes for little to no money out of their own pocket. 

But I think the odds of that are pretty thin. And if it was so easy, I would think that someone that had done it once would be back at it again the very next day trying to find the second deal. And rarely do I hear anybody doing it twice..... Sure it happens. But doesn't seem too common. 

So while most people suggest you work backwards (i.e. what are your end goals, how much money do you want to be making every month, etc), I think its just as important to work from the beginning a bit too. i.e. How much money do you have to start?  

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