Commercial Vs. Residential Real Estate

Posted by Berkshire Hathaway HomeServices Texas Realty on Thursday, April 25th, 2019 at 2:50pm.

Published by: Daisy Gregg

Similar to any other certification or schooling, once you are done, you have to head out into the real world and decide how you want to use the knowledge you have just gained. Many certifications are made specifically for certain careers. If you are reading this, you have succeeded in achieving your Real Estate License or you’re deciding if you want to make it your career. So now that the whole world of real estate is open to you, you have to decide what area you want to go into. Generally there are two area of real estate: Commercial and Residential. Then tiers of residential, for example, residential can include luxury. I wanted to come on here and give some information on pros and cons of each to help you decide!

Commercial Real Estate

Commercial requires a little more schooling to be able to predict the economy and profitability of the market to be accurate in listing the building. You will be dealing with large transactions that have to do with apartment buildings, office spaces, etc. There is a great article with this excellent quote from IHireRealEstate:

“Commercial real estate careers require attention to statistics and profitability. Properties should be adjusted and discussed in alignment with data retrieved regarding the property’s history and revenue. Because property appreciation in this sector is based largely on prior profit and not comparisons to surrounding properties, these professionals must be well-informed regarding the relevant market and influences affecting past and current income.”

Also this is a much slower market. Commercial has higher payoffs but slow returns. Since, these are massive buildings or even smaller office spaces, there isn’t always a customer every few days that wants to rent your space. It needs to be a very special person or group, and those are harder to come by. But bear in mind you could receive a years’ worth of salary with one lease or sell in the commercial world. So it can pay off, you just need patience.

Residential Real Estate

Let’s just take everything about Commercial and flip it on its head! You need the same qualifications to sell residential but you need quantity of sales or listings. Most agents do both sides, meaning they appreciate listings and buying clientele. A few go in one direction or the other, they have a knack for marketing their listing and have a large database enabling them to get the property sold quickly or they have a great repertoire with their clients and can easily find them what they want and need. So you can even specialize just in residential! But let’s go over the pros of doing residential real estate.

Great Quote from IHireRealEstate:

“Residential properties tend to experience higher tenant turnover rates than commercial options, leading to a greater market for real estate agents and other professionals involved in the listing and selling processes. They also require more frequent and involved hands-on maintenance while under lease or ownership.”

This part of real estate is the most well-known but not many people consider the personal nature of this line of work. You are enabling these people to make the largest purchase of their life, it means a lot! Now residential is more involved than commercial, you may have longer hours. Commercial isn’t as abundant for listing or buying, so you need to spend more time searching and organizing for residential. And be prepared for your clients to take awhile to decide or need to see 50 properties!

 

I really hope this has helped, you decide! If you are on the fence, just do both!

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