8 Pros and Cons of Buying Commercial Real Estate over Residential Property

The real estate sector consists of apartments, bungalows, office spaces, spaces for shops etc. However, places used for a living are different from places that are used for running a business. And the tax implications, property prices, the terms of rent agreements, etc., vary based on the purpose for which the space is to be used.

However, irrespective of the type of real estate, buying and selling property is a cumbersome affair. But buying a commercial property has long-term advantages, so if you want to invest, you can invest in Fort Myer commercial real estate.

Some Reasons Why You Should Invest In Commercial Property

The Vacancy Period Is Less

For commercial spaces like office space or a shop, the vacant period is quite less. This means that the property does not remain non-productive for a long period of time. The value of an office space or a building depends on the rent that it fetches per month.

So, if the building or office space does not have an occupant, then that is wasteful. In commercial spaces, the vacant period or non-productive period is quite less because the rent agreements are formalized in a much more detailed manner vis a vis a residential apartment or a house.

Since a commercial tenant himself is running a business, he is particular about giving a notice period at the right time. This makes it easier for the owner to find a new occupant before the previous tenant leaves. Again, business decisions are generally not taken in haste, but individuals might shift locations hastily if they get a better job or educational opportunity in another state.

Buying Commercial Real Estate over Residential Property

Possibility Of Getting A Higher Amount Of Rent

Spaces for warehouses or offices are larger than a single apartment or a bungalow. Office spaces or shops are located in areas where the infrastructure is well developed, where a large number of facilities like a well-developed network of transport are present.

The value and the rent of a place depend on its size and its potential for growth. Since office spaces or warehouses are large and are located in well-developed hubs, they fetch a higher amount as rent vis a vis an apartment or a bungalow.

It is for the same reason that commercial real estate has a higher long-term value. So if you wish to sell your house and your office space, you will get a larger return for the latter.

The Value Of The Property Does Not Fluctuate Much

The Value Of The Property Does Not Fluctuate Much

The value of real estate depends on many factors like the law and order situation, the infrastructure development, the local population of the area etc. However, the value of a commercial area fluctuates less in comparison to that of a residential area. This is because such areas already has a well-established law and order system, a good level of infrastructure development etc.

So unless something very significant happens, the value of an office space or a shop is unlikely to see a rapid change. But most flats and bungalows can see rapid changes in price depending upon the prevalent situation.

The Money To Be Spent On Interiors Are Quite Less

For office spaces or shops, the tenant takes care of all the furniture, lighting etc. So unlike in the case of an apartment, the landlord has little to worry about the interiors, the furniture etc.

Money Spending on House
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Tenants Are Usually Easier To Deal With

Most commercial spaces run a business, so the business establishment itself enforces discipline. So the owner does not have to worry about enforcing discipline as he has to do with tenants in an apartment. So as an owner of office space, you will not have to worry about misbehavior or about loud music as it is for the office manager to take care of it.

Reasons Why You Need To Think Before Investing In Warehouse And Office Spaces

The Minimum Investment Required Is Quite High

Minimum Investment Required Is Quite High
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It is true that office space or a warehouse will give higher rents and higher long-term returns, but not everyone can afford to buy these spaces. Only those people who have deep pockets will be able to purchase commercial spaces.

Also, getting a loan and purchasing these spaces is quite tricky. Since the loan amount will be huge, most banks will be unwilling to lend to those who do have the ability to give adequate guarantees or collateral.

There Will Be Higher Tax Implications

When you earn rent or make a profit after selling real estate, then that is calculated as your income. In most jurisdictions, the rate of tax on a commercial property is higher than that on a residential one. So even if you might be making more money with a commercial space, you will also have to forgo a large amount of that money as tax to the government.

money as tax to the government
Source: freepik.com

There Are Fewer Numbers Of Takers

Every person needs a house to stay in. Moreover, many students and workers rent apartments that are close to their college or space of work. Compared to the number of people who need a house to live in, the number of people who need a shop or a warehouse is quite less. So the market for commercial real estate is much less as compared to that for a residential place. So when you want to rent out a shop, then you have to wait for a long time till you get a tenant.


Investing in property fetches rich dividends; however, many people who are new to this sector do not know about the specific advantages and disadvantages associated with a commercial space. Hence, they may end up negotiating a subpar deal with a potential tenant..

A commercial space gives higher rent, greater value appreciation and less volatility, yet a residential area is more affordable and allows for easy loans. Before you invest your money in any real estate, you should study the market and negotiate an appropriate value for your real estate.