Looking at real estate as an investment opportunity sometimes can cause many questions. Which type: commercial cash flow or residential development, what period, location, size, and even design pattern would be the safest and will guarantee promised return for a long time – these are some of the basic questions, an average real estate investor faces.
What are my main goals?
The same as investing in other asset markets, also
in real estate, it is important to know the goal to be achieved by a certain step
If choosing invest in the stable cash-flow project, this means priority should be wealth retention with little value adding, as returns are smaller. For those, willing to earn more at a shorter period, better suits more liquid products from real estate shelve. Usually, this means choosing between residential and commercial real estate segment. Let’s try to figure out which one will suit us best.
Difference & Similarities
The main difference between those two classes
is the purpose of usage, where at one side the property unit is used for
primary living and on another side “walls and bricks” are used to do business
activities. Similarities are that humans spend most of their time in both of
them. But how this affects investment potential in one or another group of
The short and simple answer is – by the meaning of how strong is a need for using this or another property class.
Strong emotional presence
Usually, residential property is a winner of such a competition in terms of more basic need for a living space, as in most cases it is used for primary living purposes. Primary living means a family is looking at this property much more than just “bricks and stones” – starting from a dream before a purchase, got acquainted with surroundings, used to local amenities, spent celebrations, grown up kids upon getting older and having unforgettable memories. This all together gives more confidence based in a practice that family members will do more in any uncertainty period or economic situation changes to save their own property, just because this is much more than just an object of numbers.
But what about commercial properties?
Based on our previous experience in both residential and commercial real estate markets the opposite side is with commercial properties. We would not like to announce that investments are more unsecured, but in some changing environments, like economic cycles, commercially used properties can be more short term affected. That’s because of a business nature where every business needs to be as flexible as it can be, so in case of change of business plans or economic conditions, the first one thing is to adjust their physical location needs to the new conditions. Usually, this means that vacancy rates can increase and the value of the property can decrease because the income generated is one of the main factors affecting the value of a property. And there are few things to deal with a business owner in such cases as their answer could be –it's just a business…
Summarizing all that said, at first projects
on www.boldyield.com we will try to list those real estate projects with a focus on
residential properties, generally used for primary living purposes. Having
small, flexible, modern projects in demanded locations for multi-families with the basic place of residence, means developers have high liquidity and investors -
attractive returns. A balanced mix of win-win ingredients, by the way. For
sure, such a model for the first time of operations is the best one for both- investors and developers.
Let’s move on and browse through this well-grounded market piece together, to extract the most valuable advantages for each part!