Is Commercial OR Residential Real Estate Investing Right For You?

It might be a debate as old as the hills but if you’ve decided to invest in real estate, one of your key concerns will be deciding which market to choose.

Real estate investing goals may be mostly based on profit, but not all investment opportunities are created equal.

So whether you are going after an industrial property or sticking with a smaller scale, residential investment, profit potential can vary greatly and depend on your risk tolerance.

That’s actually at the core of this discussion.

Is it simply a matter of how much risk to take or does the issue include more factors?

Let’s explore why you would want to stake your claim in Arizona property, and at the same time help you decide which market segment is right for you.

Regarding residential real estate, some would look at historical data to help determine if this is the area of real estate to get into.

For discussion’s sake, research shows that in 1975, the price for a median-range home was $33,300 and in 2005 it was $195,000.

Additionally, history has shown that the average home doubled every seven years.

Here in the Phoenix area at the time of writing this article, the home sales figures were up over 16% from this same time last year.

This is the kind of news a residential investor would truly love to hear.

For the commercial real estate market, it’s clear that not all purchases have the same profit potential. But when a market is deemed good for rental income, that goes on the plus side.

In the case of metro Phoenix, a May 2015 Forbes article rated this area as tops for affordable renting which would be great for a commercial investor to consider.

But figures change, that’s why it’s so important to know what you are doing, and REI clubs can help. They offer networking, education, support and are a great place to get answers to pressing questions or suggestions for whom to contact if they don’t have your answers.

When you really want to get the lowdown on purchasing real estate in Arizona, a must-stop source of information is Arizona’s Department of Real Estate.

And while their website is packed with details on so many topics it would make your head spin, we pulled out for you this list of suggested topics they feel investors should research before purchasing in our state.

These include:

– Airport Disclosure
– Beneficiary Deed
– Expansive Soil Survey
– Freeways
– Geologic Hazards
– Homeowners Association (HOA) Information
– Mortgages
– Sellers Property Disclosure Statement (SPDS) and Seller Advisory
– Water Availability

And more…

Along with a good inspection, you should also include a property survey because this can uncover easement issues ahead of time. Something like that could sink a deal or make it clear to proceed, depending on the findings.

Additionally, keep in mind that in residential and commercial markets there are different laws governing each, so you will need a skilled attorney to handle the matter in order to avoid problems.

To help in your quest to invest in real estate, we listed some pros and cons for both the commercial and residential markets.

There are many reasons to choose either track.

Now all you have to do is check these against your own criteria and get started on the REI road that’s best for you.

If you have any questions or if you’d like to learn how hard money loans can be available quickly, contact Mike and Mike at LM2 Investments, you local Phoenix and Scottsdale real estate experts.

Mike Corgiat
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