Investment in any kind of real estate is the best decision. The return on investment is high over the period of time. Now when you have your pockets full and decided that real estate is your next stop, the question is; commercial property or the residential one?
Well, we can find the admirers of both of them. The residential properties are less complicated and a first-time investor can also easily buy, rent and sell them as opposed to the commercial properties. On the other hand, commercial properties offer more financial gains compared to the residential apartments. The question really is; what are you trying to achieve? What are your future property goals?
Let us see the arguments in the favour of both of them and then you decide what to do.
Arguments in the favour of Residential Properties
1. There would always be a need of a roof over the head and so will be the need of the residential flats in Jaipur. This kind of real estate offers a steady and continuous growth in the prices.
2. The residential properties are less location driven as compared to the commercial properties. The houses in the locations with a good connectivity and basic amenities can be sold easily but the commercial properties need only be at the prime location to be sold or rented. If you have such property in the low-demand location, wait for the tenants for forever.
3. You can get a loan of 80% on the residential properties while for the commercial properties it is only 60%. Moreover, you cannot claim the relaxation on the taxes for the loan on commercial properties.
4. You can live in one of the apartments of your residential property which helps to keep an eye out on the tenants. Thus, the property maintenance and management becomes easy.
Arguments in the favour of Commercial Properties
1. The return on the commercial properties is certainly higher than the residential ones. It is a rough estimation that the annual yield of commercial properties is around 10% to 15% while for the residential properties, it is around 4%. A lot of factors need to be accounted in, though.
2. The commercial properties are leased for a longer duration of time, hence the owner can get the rent uninterrupted without worrying about what would happen when the lease period gets over. Talking about the rent, the rent on the residential properties is very low in India and it cannot be raised often as per the local tenancy laws.
3. This is the era of the startups. The Indians are giving themselves a chance to realise their vision no matter what the risk is. The more the startups more would be the demands for the commercial real estate. The ‘Made in India’ initiative is also favouring the commercial real estate with positively changing the FDI norms for the corporate sector.
4. You do not have to wait for the market to appreciate the property prices. There is less need to maintain the property, the tenants renovate according to their requirements and all the expenses have to be borne by them.
The investment is huge, so think deeply before making a decision. A lot of risks is involved in the real estate. If you are just starting out, residential property is the right option, but do own a commercial property when you are knowledgeable enough. For tips to buy your perfect house or to invest in the property in Jaipur, please contact us.