In India’s growing real estate sector, property is a valuable investment. By purchasing property, you can enhance your portfolio and potentially earn rental income or appreciation upon resale. It’s crucial to select the right type of property for successful real estate investing, considering factors like usage (commercial or residential) and your financial situation.
To help you make an informed choice, here is a handy guide delineating the difference between residential and commercial property.
Before diving into the difference between residential and commercial property, it’s important to understand what the two terms mean.
As the name suggests, a residential building is real estate designed to reside or live. Such structures are designated only for personal use, and you cannot utilise them for industrial or commercial ventures. Residential homes are further divided into the following categories:
– Stand-alone home: A stand-alone home is a free-standing house that you and your family can live in. It is a detached residence and stands on its own without association with other residences.
– Multi-family home: This type of residential property is a multi-dwelling unit wherein a single unit contains several homes. A common example is a housing society with various apartments.
– Duplexes: A unique residential property, a duplex comprises two dwelling units connected to form a single home.
Unlike residential properties, commercial buildings are used for business purposes. Such buildings include properties used for hotels, offices, retail ventures, industries, and so on. If you own a commercial property, you can either use it yourself or rent it out, fully or partially, to other tenants. Commercial property is further divided into the following categories:
- Office buildings: Such spaces are used as office fronts for business purposes.
- Retail buildings: Spaces used to conduct retail businesses, such as shopping centres, stores, power centres, etc., all fall within this sub-category.
- Land: Raw and undeveloped land also counts as commercial property since it can be utilised as a business asset.
Whether you’re thinking of investing in commercial properties or residential spaces, it is vital to know the difference between the two so you can make an informed decision. Here are a few parameters where residential property differs when compared to commercial property:
Financing: If you’re seeking to invest in property, you might need financial aid in the form of a loan. While a loan for a residential property is in the name of the individual owner, a commercial property loan is in the name of the business entity. The process and paperwork for a commercial property loan are also lengthier when compared to residential loans.
Utilities: The electricity rates for residential and commercial properties also tend to differ. Since a lot of businesses need plenty of energy, they can purchase electricity in bulk and avail of tax concessions on their utility bill.
Purchase: It is easier to purchase residential properties when compared to commercial properties. Purchasing commercial properties involves a thorough investigation of the potential buyer. To invest in premium residential properties all over Mumbai and Thane, look no further than ASG Developers.
Returns: When it comes to ROI (Returns on Investment), you are more likely to earn higher returns with a commercial property. Since commercial properties are usually leased out for longer periods, you can charge a tenant in bulk. ASG Developers has made a mark on Mumbai’s commercial landscape with top-of-the-line office spaces that can be an asset to your portfolio.
Maintenance: Investing in a residential property helps you cut down on maintenance costs considerably. Since commercial properties often house machinery and equipment, you have to spend funds on the management and maintenance of the same.
Contracts: While both commercial and residential real estate involve contracts, the former come with a shorter tenure and tend to be less complex. Commercial contracts are usually signed for a longer term and can be quite in-depth.
Now that you’re more aware of the difference between commercial and residential properties, invest wisely.
Which property is better, commercial or residential?
Whether you should invest in commercial or residential property depends on your financial standing, requirements, and how you plan to use the property.
What is a residential property?
A residential property is a space or structure you or other people can live in.
What kind of property is best to invest in?
If you want to enjoy flexibility and low maintenance, then it is better to invest in residential property. However, if you have a larger investment horizon and want sizeable returns then commercial property would be a better choice.