Commercial vs. Residential Real Estate Career: Which One Is for You?

The real estate market is one of the most potent and profitable career paths you could take on your journey to establishing long-term affluence at a young age as the industry boasts numerous benefits and advantages compared to other investment markets such as bonds, stock, and even the forex market.

While its increased leverage, hard asset benefits and long-term high cash yield and equity build-up pose significant advantages to any aspiring real estate investor or agent, it is important to note that the two industries bear numerous differences that can define the future of your career. That said, if you plan to venture into the lucrative market of real estate, you need to be aware of the various intricacies surrounding both traits, and determine the path that best suits your aspirations and skill set.

Let’s dive into the details and provide you with the necessary insights to determine whether commercial or residential real estate is right for you ‒ or perhaps even both?

 

The residential real estate market

Residential real estate offers the perfect starting ground for an aspiring real estate agent, investor, or manager because of its high turnover rate, increasing market potential, and simple and straightforward approach to property value assessment.

Contrary to the somewhat complicated uncertainties that the commercial real estate market can impose on those less experienced, the residential market makes it easier for novices in the business to gain the necessary background that will enable them to venture into the commercial market or establish a more lucrative footing within the residential sphere.

The major benefit of the residential market lies in the fact that it is a constantly growing industry. While people might not want to own or operate a commercial facility, they do need a place to live ‒ this fact alone makes for a significant turnover and selling or leasing potential.

However, the residential market is not for everyone as it requires exceptional interpersonal skills, property knowledge and an insight into the constantly fluctuating local market. You will need to establish a personal relationship with the properties you are selling and educate yourself on every tiny detail in order to answer every question the potential tenants might pose.

Along with detailed knowledge of the neighbourhood, its traffic flows, security and local socio-economic environment, you will need to realistically determine the property’s potential by calculating its selling value based on its location, future market value in an evolving environment and competitive rates.

 

The commercial real estate market

In contrast, the commercial real estate market calls for similar, yet unique skills and utilization of resources that require a keen mind and plenty of experience. However, the rewards are greater as this market has a vast cash yield potential.

Commercial real estate requires you to not only know the market potential and how to attract prospective clients, but also to strategize and optimize your property to increase its value in the competitive market. Given the fact that commercial properties require long-term tenants in order to yield a positive ROI, it is of the utmost importance to specialize in property optimization, value proposition, and professional property management as well as security and technical services.

The management and procurement of these services and benefits require substantial resources both in terms of monetary investments and professional manpower, meaning that commercial investment and management is rarely a one-man show.

While tenant turnover is low in the commercial sphere, the cash yield is significantly greater than in the residential real estate arena as leases last for decades and commercial clients are able to make greater monetary investments in order to secure a valuable property. This means that you can retire quickly from investing in and managing commercial properties if you sell or lease a property to a successful, long-term company.

Both the residential and the commercial real estate industries have a tremendous ROI potential and present lucrative and sound career paths that could help you achieve financial independence and even get rich in a short amount of time. While these individual industries require you to obtain unique skills, you can reap the rewards of both worlds with careful planning and by making calculated decisions.

 

Chloe is a designer, stylist and a writer at Smoothdecorator.com. She is passionate about photography, ballet and music. Chloe also enjoys researching, learning and blogging about interiors, architecture, real estate trends and various art related topics, since she is crazy about aesthetics. You can find Chloe on FB or Twitter.