Commercial Real Estate
For those looking to purchase commercial real estate property, there is a business or investment motive. People buy commercial real estate property in hopes to make a profit from their purchase. They may purchase property to serve as the location of an existing revenue generating business or as a way to generate new revenue from renting or leasing their property. In both situations, the commercial property owner is able to profit after making the purchase. A commercial real estate owner could own retail space or an apartment building where tenants or lessees pay rent or lease the property. On the other hand, a commercial real estate owner could also be a business owner who needs property to advance their current business.
Commercial real estate property can potentially be owned by a corporation or company rather than an individual person. If a technology company is seeking to purchase a warehouse to manufacture and/or distribute their products, that property would be in the company’s name rather than an individual person. When a company or individual looks for commercial property to purchase, their focus is primarily on the numbers. The property they choose to purchase will be decided based on which property will generate the highest return on investment (ROI).
Residential Real Estate
When an individual, couple, or family decides to look for residential property, they have to decide where they will be most happy living. People buy residential property as a primary or secondary home. Generally, the property they will purchase is where they will live day-to-day and where they will raise their families. The decision to buy residential property is strongly driven by emotion. The property an individual, couple, or family decides to purchase needs to fit their personal needs. Things many people consider when purchasing residential property are:
- Is this a safe neighborhood?
- Can our family grow in this home?
- Is there a yard or a pool?
- Can this house become my home?
These questions resonate with the emotional aspect of buying residential property. Although everyone has a budget when looking for a home, the numbers become less important.
Commercial and residential real estate are two very different types of real estate. The motive of the purchase is the biggest difference between the two types of real estate. While commercial real estate buyers are looking at the numbers as they make their decision, residential real estate buyers are looking for what makes them happy in a home.