When you’re making the decision to go into the field of real estate, it is important to know whether you are looking to go into commercial real estate or residential real estate. At times, it can be easy to assume that these two are the same since they are both within the same industry, but comparing these two would be like comparing apples to oranges. It is important to make note that they have distinct aspects specific to their sector. So before making that decision of which one you want to pursue, take a look at how they differ each other and see which one best fits what you are looking to do.
Overview of Commercial Real Estate
Commercial Real Estate typically deals with investing in land or buildings to generate profit. You would be looking into office space for rent or industrial type buildings. A career in commercial real estate will require much more focus and attention to detail, especially to statistics and profitability. The properties you will be working with should be adjusted and discussed regarding their alignment to the data that has been retrieved in regards to the property’s history and revenue. Going into this field, you are going to need to be well-versed when it comes to the relevant market and influences that affect past and current incomes. This is because property appreciation in this sector is based primarily on profit of the past rather than comparisons of surrounding properties.
Overview of Residential Real Estate
Residential Real Estate is known to deal with more family-centered homes. So single-family homes and one to four family rental residences would all fall under the umbrella of residential real estate. Working in this sector, you will be closely tied to your clients’ day to day lives. It will be imperative that you familiarize yourself with the surrounding area you are working with. This will include knowing the local school districts, businesses and shops, as well as the available public transportation. You will also want to be aware of any rules of the associations as it pertains to property care in that area. You will need to have strong customer service skills and the flexibility to work around your clients’ schedules.
The Differences Between Residential and Commercial Real Estate
When it comes to commercial real estate, the properties you work with will tend to have a lower tenant turnover rate with longer lease/ownership periods than in the residential sector. Due to the limited need to acquire a commercial space along with other factors, you will tend to see a lower demand for professionals in listing and obtaining properties whereas in residential real estate where there is a much higher demand for real estate professionals due to the higher tenant turnover rate. Another difference between the two comes in the pricing of properties. Commercial real estate is usually priced higher which allows for higher commissions. As it pertains to residential real estate, you can also expect to be a lot more hands-on with maintenance while clients are on a lease or under ownership.