Which investment is the best choice?

ys face a piquant situation whether to invest in commercial real estate or the residential property. For the benefit of those who are in a dilemma to choose between the two alternatives, let us analyse and compare the advantages and disadvantages to reach a solution.

Residential property means stability, growth

Many Indians regard investing in residential property is traditional way of investing money. The residential properties provide security to the money invested and fulfil the primary needs of a home of the investors. Of course, there will be comparatively less market fluctuation of prices. Moreover, one can seek support from housing schemes and reap tax benefits by investing in this reality. The demand for residential properties has been increased on account of several schemes launched by the state government. One of the important benefits of investing in residential properties would be progressive growth of the money invested.

With the expansion of towns and cities, the demand for houses is on the rise. The demand is pushing up prices of homes. Moreover, the rental income from residential houses will ensure steady cash flow to the landlord. It provides stable income to the landlord. However, there are challenges in the residential sector. Sometimes, the landlord would have to face with the inertia in the market. Economic recession may delay finding suitable tenants.

Commercial real estate: Higher returns plus diversity

Characteristics of the commercial investment are higher income generation and diversity of the investment portfolio. Of late, this sector has been attracting more and more investors. Office spaces, retail space, warehouses and other commercial properties offer a wide range of benefits to the owner. The rent from these properties would be comparatively higher. Many start-ups and MNCs are expanding their activities in the country, pushing up the demand for commercial space.

Investments in commercial real estate would reduce the risk of investors in their portfolio. Moreover, it offers diversity to the portfolio. The scope for individual financial problems is very less here. However, the investment is not without its usual challenges. The initial investment in commercial real estate, compared to residential investments, is very high. The complex features of this form of investment would be identifying suitable tenant and maintaining the property.

In the country’s real estate scenario, both the residential and commercial investments offer attractive choices. Each division has its own pros and cons. As the market is growing, a balanced investment is described as a wise decision. While investing in reality, the investors should assess the percentage of risk, investment horizon, financial goals and other aspects. Those who want to create stable and long-term wealth creation, the residential property investments forms good foundation. Those who aspire to earn higher returns on rent, register accelerated growth should opt for commercial investments. At the same time, the investors should constantly update their knowledge on latest trends and changing rules. Expert opinion should be obtained to reach one’s economic goals.