The Golden State has a current population of over 39.5 million with a diverse economic base. With a high influx of new residents, every year due to a wealth of opportunities, its real estate market is a thriving industry. Both of its subcategories – residential real estate investing and commercial realty are highly lucrative ventures throughout the state. While commercial property investment may seem highly rewarding, maintenance and management costs are also too high. The former investment strategy, on the other hand, comparatively has fewer risks and is more affordable for aspiring investors.
Residential Real Estate Investing in California: Benefits
1. Better Control of Property Acquisition
With real estate investment in California, you can choose an emerging neighborhood and the type of property depending on the price that suits you. You can hire us as property managers and we can work together on a repositioning plan to help you sell it at a higher price. If you wish to hold it, we can help you get dependable tenants with disposable incomes at competitive rates.
When it comes to commercial real estate investment, it is much harder to find tenants and you may need to wait longer. For an office space or studio, you will still have to spend a lot on maintenance until you find a renter who specifically requires that space.
2. Lesser Amortization Period
It will take you longer to pay for a commercial loan. If you invest in an office space, it will usually have a larger amortization period of 30 years with high interests and a balloon payment at the end. For residential properties, the amortization period is less, with 10, 15, and 25 years of fixed mortgage rates.
3. Higher Appreciation
In California, values of homes have gone up to 6.8% since last year. It is expected to increase by 7.6% in the next year. This will specifically help you when you are waiting to sell your newly bought property or even increase the rent gradually.
4. Less Management Problems and Risks
When you have a commercial space with multiple leases, you have more management responsibilities. You also have to spend more of your time concerning public safety. As the commercial property is open to the public, there is more risk of property damage along with injuries.
5. Independent of Economic Crisis
Commercial properties are directly dependent on the city’s economy. If by any chance, the city’s economy crashes, the value of commercial space also plummets. Consequently, that space will be left vacant and you will still have to pay its maintenance costs regularly.
Reach us for Residential Real Estate Investing in California
At Beach Front Property Management, we can help you with all your concerns about investing in a residential property. Call us today!