Top five reasons to switch from residential to commercial real estate investing
5. Option for triple net lease
A triple net lease (NNN) is a lease agreement in which the lessee is responsible for paying all property expenses, including building insurance, real estate taxes, and the cost of repairs and maintenance, on top of the rent and utilities.
a residential property.
4. It’s easier to increase its value
The assessment of a residential property’s value is often based on the average comps of surrounding properties. While local comps have influence, the overall value is based on the total amount of revenue generated by the property. Therefore, you can increase the value of your property by generating more revenue streams.
3. Higher ROI opportunities
Commercial real estate has the potential for a significantly higher return-on-investment (ROI) compared to most residential properties. Also, commercial real estate offers other income options, like leasing parking spaces for tenants, charging parking fees from customers and visitors, imposing maintenance fees, etc.
2. Fewer maintenance issues
Because commercial properties are intended for business use, tenants are more likely to do their part in keeping the property well-groomed and in good condition, especially when they receive customers on a day-to-day basis.
1. Increased income security
As an owner of commercial real estate, you most likely lease your property for a longer-term. Also, you have the power to require a higher deposit amount which is forfeitable if the tenant needs to pre-terminate the lease.