Businesspersons and entrepreneurs have invested in properties to gain profits for an exceedingly long time. Most often, properties that entrepreneurs invest in are residential plots, shopping malls, theme parks, and entertainment resorts.
In the millennial era, going to the mall is one of the most common activities enjoyed by people worldwide, but, alongside, everyone needs a home to live in. Seen from a business perspective, there are many alternatives when investing in a property. The following is an introduction and a slight comparison between investing in small apartments and small strip malls.
Investing in an Apartment Building
Investing in smaller apartments has many advantages attached to it. Primarily, it is a cheap thing to own as apartments have lower down payment rates and the ongoing costs are low. Smaller apartments, when compared to larger ones, are easy to manage and have a healthier rate as more rent can be derived from each unit.
A property that consists of more than four units requires a commercial loan when financing. Usually, a down payment of 25% is required. Although, if the investor is lucky, they may find various deals in which owners are privately selling a property, and they hold onto the mortgage and take smaller down payments. However, a due payment attached to owner financing is due within a time limit of 10 years. Therefore, refinancing is required with a down payment of 25%.
The maintenance costs are another important aspect that must be considered when investing in a small apartment building. Small apartments usually do not require on-site repair employees compared to larger apartments that usually do.
The final things to consider when investing in small apartments are:
- Decide whether the tenants will be affiliated to Section-8 or whether they will be non-Section
- The location of the building
Investing in a Small Strip Mall
As long as people have to eat, they will head to the grocery store or the mall with food outlets. Therefore, investing in a small strip mall is still as valuable as ever before. Although a costly investment, the returns, and popularity an investor gets is satisfactorily appealing.
The retail plazas that are found locally offer investment perks in the field of commercial property and real estate. There are advantages related to tax, mortar, brick, and land security. Retail stands out because it can possibly deliver both the building of wealth and passive income simultaneously. It is recommended that investors collect monthly payments of rent and wait for the value to increase.
Alongside, the latest research and forecasts show that the future is even brighter for the commercial real estate market in the US. For pessimistic investors, it is better to know that local retail properties are often the last things that become damaged or outdated.
Whether it is Uber, Airbnb, or strategies related to city planning, everything is about local shopping these days. Therefore, it easily foreshadows the ever-increasing performance and returns of these properties.
Which is Better?
Whether you are investing in a small strip mall or a residential property, you need to consider the amount of money you are putting in. While investing in a small strip mall, you need to consider that you have to do more work comparatively in order to get sponsors and deal with organizations providing products. However, when investing in an apartment building, you will mostly get a fixed amount of money according to the residential value of that place.
No matter what you invest in, make sure that you consider the following things:
- The location of the property
- The legal paperwork of the property
- The average rental value of the area
- Maintaining all the financial transactions in bookkeeping