Commercial real estate differs from residential properties

On Behalf of | Sep 20, 2018 | Commercial Real Estate

Individuals in New York usually view investing in residences as the same as investing in business properties. In reality, these two types of investing are very different. Here is a glimpse at what makes residential real estate and commercial real estate investing so different in New York and elsewhere.

One of the main differences between residential investing and commercial investing is that the latter involves operating, leasing, developing and acquiring a wide range of property types. These types may include, for example, industrial and hospitality properties, offices, retail shops and apartments — also known as multifamily properties. Other property options for investors include student housing, senior living facilities and self-storage.

Meanwhile, residential investing mostly involves buying, renting out and running a dwelling featuring one unit. Both residential real estate and commercial real estate have the following value drivers: supply/demand, land value and structure value. However, the commercial side of investing also has the driver of net operating income. This is basically the money generated after an investor subtracts his or her operating expenses. The income driver can greatly impact an asset’s value, particularly in an area of the United States where rents are high — for example, in Manhattan.

Delving into the world of property investing can be thrilling as a result of the promise of profitability. At the same time, commercial real estate investing can also be challenging, especially for those who are new to it. However, an attorney in New York can help a budding investor to navigate the legal aspect of any property deal with confidence, with the goal of ultimately achieving his or her real estate goals in the Big Apple.