Which is the best investment opportunity, a House, a Plot or a Commercial Project?

There are many reasons to invest in real estate. People are usually confused about investing in real estate or stocks. Real estate investment not only provides you with a tangible asset but also ensures good ROI (return on investment) and financial stability in the longer run.

Difference between a house, plot and commercial project?

A plot: A plot is a piece of land which could be owned by one or more than one person or other legal companies or trusts. The plots are a vacant place except the footpath and other enhancements. They have defined boundaries which are documented but not mandatory to have them physically. 

Residential property: Residential properties include single-family homes, townhouses, and apartments. The property owner can live in the property or can rent out space and enjoy rental income. Families and individuals typically lease residential properties. As a result, there is typically an emotional element involved in residential real estate as it involves renting individuals or families their primary place of residence.

Commercial property: Commercial property is used for non-residential activities such as hotels, office space, retail shops, industrial buildings, public facilities, etc. Similar to residential property, the owner can operate a business from the commercial property they own or lease some or all of the space to tenants. Many companies prefer to rent rather than own the property they operate their business from since real estate is not their core business they can free up capital to invest in their core business.

Which is the best investment opportunity? Residential property, a Plot or Commercial property. 

Choosing between a commercial vs residential or a plot investment property is no easy feat to tackle, especially because all come with their own set of benefits and drawbacks. All will diversify your portfolio, they come with significant tax benefits, and will bring you one step closer to achieving your goals of financial freedom…So how is an investor to choose between three of them?

Benefits investing in a House

1- The average person may not have enough in savings for a sizable down payment on a commercial property, while it is much more likely that they have enough saved for a single family home. If the thought of a commercial property sounds too overwhelming as a new investor, think of it this way: Once an investor has purchased several cash flow producing residential properties, they will likely have the capital and necessary experience to invest in a commercial building.

2-  Every real estate type comes with a specific set of opportunities. The primary objective of a residential property is accommodation or renting. When the right time comes, you can even sell out your property to earn good returns.

3- Due to an increase in population, the demand for houses is increasing at a fast pace. As a result, the pool of people looking for residential property is large. That means it is easier for you to sell/rent out your house. In short, the demand for houses and other residential properties is more than the office spaces and shops.

Benefits of investing in a Plot

1- Whether you plan on living in your purchased home or not, you will still need to pay a certain amount for maintenance. Some of these charges are constant, for example, the maintenance fees issued by housing societies. Many times, however, they can be unplanned, as it is in the case of plumbing issues, electrical problems, renovations, etc.

2- One of the biggest advantages of investing in land is that it is a finite resource. New residential high-rises will continue to be built, but there is only a limited amount of land available for ownership. Because of this, owners can be certain that their investment will constantly be in demand as a result of which, its price will continue to appreciate.

3- A plot will not decay ever. A building not constructed properly may decay and depreciate in value, but the value of the plot will only appreciate.

Benefits of investing in a commercial property

1- The best reason to invest in commercial over residential rentals is the earning potential. Commercial properties generally have an annual return off much higher than residential or plot. 

2- A commercial real estate property owner can modernize the property, raise rents, restyle the exterior or interior, or even apply for a zoning change. He can sell or rent the property on whichever amount he likes.

3- In a multiple occupancy building, there is less risk of income loss when it comes to vacancies as other tenants are still contributing to covering your operating costs.Many people are contributing to the cost of the building so there is less risk of affording the cost alone.