Property investment is one of the most important financial decisions in the life of an individual and that is the reason why an individual think 10 times before investing his or her money in property. Property can be of two types one is commercial property and other is residential property and if you do not know the difference between the two than before taking any decision regarding property investment you should first look at the difference between commercial and residential property –
Commercial Property VS Residential Property
Meaning
Commercial property refers to that property which is used by the purchaser of the property for conducting business so as to generate profit by doing business in that property whereas residential property refers to that property which is used by the purchaser of the property to live in that building or house.
Initial Purchase Price
The initial purchase price of commercial property will be always higher than residential property if you compare the price of commercial and residential property of the same area. Hence for example, if the price of residential property in an area is $500 per yard than the price of commercial property will be more than $500 per yard and for some areas price of commercial property can be 5 to 10 times of price of residential property.
Use of Property
Residential property is used by the owner of the property to live and it can be in the form of independent house or in the form of multistory building or in the form of apartments while commercial property is used by the owner of property to conduct business and it can be in the form of warehouse, independent shops, shopping malls, office building and so on. In simple words, commercial property can be used for a variety of purposes which is not the case with the residential property as it can be used for the limited purpose of living in the property.
Rental Income
In case of commercial property rental income is higher as compared to residential property which commands less rental income, in simple words if you are looking for earning rental income by purchasing a property than you should go for buying commercial property instead of residential property.
Resale Value
The resale value of commercial property is higher because it is easy to make modification to commercial property and one does not have to dismantle the whole construction but as far as residential property is concerned its resale value will be less because if one is buying residential property than he or she prefers to make changes to that property and in majority of cases people dismantle the whole construction and do new construction according to his or her taste.
As one can see from the above that there are many differences between commercial and residential property and that is the reason why if you are thinking of buying a property then you should carefully read above points and then decide whether to buy commercial property or residential property.