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Should you buy residential real estate property?

On Behalf of | Jun 22, 2022 | Real Estate Law |

When deciding what to purchase for your first property, you will have two main categories to choose from: residential real estate and commercial real estate.

Each type of real estate has its own benefits and potential drawbacks. Likewise, each one may suit a different person or situation better, depending on specific circumstances. So which one should you buy?

Benefits of residential property

Leverage takes a look at both commercial and residential real estate properties. Generally speaking, residential real estate properties provide a kinder entry point if you are new to owning real estate.

Residential property has notably lower entry barriers. It is less complicated and most people understand the relationship between tenants and landlords in this context. On top of that, residential properties are more affordable.

There is a steadier demand for residential property, too. Not everyone needs commercial space, especially as workplaces across the country continue to turn to digital means of employment and remote or work from home opportunities. However, everyone needs a place to live.

On top of that, even in economic downturns, residential property maintains consistent returns especially compared to commercial properties. These properties tend not to suffer impacts quite as hard as their commercial counterparts.

Potential risks or downsides

However, residential properties also come with some potential downsides as well. This includes a lower cash flow, a more frequent turnover rate, and property value that depends on the neighborhood quality or the location of the property itself.

When starting out on your journey, these are all important matters to consider. Residential real estate may be the option for you, or you might want to continue looking.