Comparing real estate to residential, commercial real estate is almost like comparing oranges to apples. Commercial real estate primarily is business-oriented. It generally involves property that is used, sold, leased, or bought for an expected future business purpose. It is also considered an investment, because it is used as capital for an expected rate of return. The primary difference between commercial and residential real estate investment is that residential property has to be utilized and sold in order to make a profit. On the other hand, when making a commercial property investment, the property needs to be owned by the commercial business entity itself.
Residential property generally is purchased for personal or family purposes. When the need for real estate rental arises, the property owner can make a profit from this property by leasing it out. Another possibility is to purchase a single family house for personal use and rent it out in a short term basis to make a profit on it. Residential property investment opportunities are available in homes, condominiums, apartments, townhouses, mobile homes, agricultural properties, farm lands, and many other types of real property.
Commercial property, on the other hand, is typically purchased to turn it into a business. This type of real estate investment opportunity involves purchasing commercial real estate with the intent to use the real property to earn an income through renting it out. The profit from renting the property to others is often determined by the amount of time and money it takes to run the business. Some real property investors are interested in creating rental income streams that can generate significant profits.
Real property investment opportunities are not limited to commercial real estates. Some residential properties may be converted into residential rentals, which is a good fit for investors who have experience in this area. Home owners interested in converting their properties into rental units may do so for profit. They may purchase a property that they intend to rent at a lower price than its market value and then turn it into a more profitable unit for rental income.
Investors also can make money by investing in investment properties for personal use. Many realty investors own rental properties for the purpose of increasing the resale value of their home. Such owners should make sure that the homes they buy are in good condition. Some homeowners purchase foreclosed properties, fix them up, and then rent the property out at a profit to help make up the difference between what the homeowners paid for the property and the amount the homeowner is able to charge for renting it out.
In addition to residential and commercial real property, there are other realty investments. One can also invest in real estate investment trusts, such as realty funds, realty partnerships, and realty partnerships. These types of realty investment trusts invest in different realty ventures. Realty investment trusts (RIAs), for example, are made up of a series of properties that are owned by one person. Investors who own realty IRAs will have their share of the ownership in the REIT.