There are various benefits to investing in single-family units and commercial real estate. If you’re looking to make an investment in either single unit or commercial real estate in Macomb, MI, but unsure which one of the two is more suited to your preference, read ahead for a quick overview of each:
1) Management
Multifamily units are also commercial real estate despite being for residential purposes. It can be a lot easier to manage a single building or apartment complex instead of multiple single-family units in various locations. There can be issues among tenants when it comes to multifamily units, but that’s not very common.
2) Maintenance
While apartment owners tend to be more reckless when it comes to the maintenance of their unit than house tenants, with commercial tenants like businesses it’s a lot smoother than any residential tenant—simply because for a business, the maintenance and appearance of their outlet matter to them just as much as it matters to you.
3) Financing
Not everybody will have enough cash on hand for investments as large as these, so a bank loan often becomes inevitable to invest in real estate. Given that banks will not be willing to give multiple loans, or at least be hesitant to do so, it’s easier to attain one loan that can be used to purchase a commercial property with multiple businesses or families, as opposed to multiple single-use and single-family units.
4) Net Leases
Commercial standalone buildings and outlets, especially those owned by larger brands going for a specific structure and look, are likely to sign off on triple net leases. This means landlords and property owners are not liable to pay insurance, property tax or maintenance. So less spending by the actual owner in this scenario.
5) Investment returns and cash flow
Single-family units tend to return fewer profits for the simple reason of size. Multifamily and retail units tend to facilitate more tenants, which equals to more returns and greater cash flow. Single-family units annually return between 1 to 4% on the purchasing price, in comparison to commercial properties which return more than double at 6 to 12%.
6) Vacancy
In a single-family unit, the tenant turnover is slow; your tenants will most likely be there for a longer period of time but that also means that when they move out, it will be longer to find new tenants. In economic lows and recessions, finding new tenants will be even harder. However, any prime Sterling Heights commercial real estate, for instance, is likely to have a quick turnover and be easier to flip.
If you’re starting out in real estate investment, residential properties are better, but if you want a long term investment, our expert brokers can help guide you on the best investment options. You can find out more about all the different communities we serve by getting in touch with us today.
