The difference between commercial properties and residential properties is that someone will be living in the residential home. That will mean that you are the landlord and as such need to keep the property in a good and livable condition. As maintenance issues come up you will need to address them promptly.

Maintaining an additional property can sometimes seem like a hassle or big financial responsibility. Take a moment to think about the benefits of keeping a rental home in good repair. If your home is run down in disrepair no one will want to live there. That means no rental income to cover that mortgage payment. Another reason for keeping the maintenance on the home up to date is that when you go to sell the property a well maintained home will return a better profit from appreciation.

With a rental home you need to be prepared for the commitment and be dedicated to your responsibilities as owner and landlord. It will take an investment of your time and in some cases personal capital to have a property that generates revenue. In the best case scenario the rental income will return a profit, but should minimally cover the homes maintenance.

When it comes to rental properties there are a couple types of income. Those are appreciation and yield. They appreciation you realize when you sell the home for more than you paid for it. The yield is your annual rental income. These concepts usually work inversely. That means that a property that has higher yield will generally have a smaller appreciation and vice-versa. The best situation would be a balanced approach to achieving moderation with each.

Financing a residential purchase has differences from a commercial real estate loan. With a residential property you are not usually expecting a profit on the scale of a commercial real estate deal. The residential mortgage terms are typically longer term which will allow you more payment, term and interest options. Many investors that already own a home will secure a home equity loan that helps them with the down payment on the investment property.

Today, investing in commercial real estate, whether it’s residential properties to rent or office and industrial buildings, is quickly becoming a hot ticket item with some. Before you just jump in with both feet so to speak, consider the following tips and cautions.

First off, remember that unlike other investments you might make, commercial real estate is probably going to require quite a bit of your time and attention rather than just your investment dollars. If you’re considering taking advantage of the foreclosure crisis by purchasing homes to rent out, this means making sure they’re up to code, making needed repairs and remodels, finding tenants, collecting rent, taking care of ongoing repairs and maintenance, and so on. This is also true of office buildings or other commercial real estate. You need to manage tenants, take care of the property and hire landscapers and cleaners, and so on. Yes, you can hire someone to manage the property for you, but even so, there are many decisions that need to be made, invoices to approve, checks to sign, and wages to be paid. This means that no matter what, your investment in commercial real estate is going to be an investment of your time and energy, not just your money.

Another consideration you need to think about is whether or not your investment in any type of commercial real estate is going to be supported over time. When the economic situation in one area is so bad that there are vacancies in homes and office buildings, this means that there may not be enough populace in that area to support your investment. Sometimes buildings and homes are vacant for a reason! You need to seriously research the area in which you plan on investing; is the population growing or shrinking? What industry is in this area to support the population and your real estate investment? Are businesses coming into the area or leaving it? You need to do this research before you get caught up in the hype and excitement of rock bottom real estate prices.

Yes, there have been those who have made a fortune in commercial real estate, but usually those millionaires are the exception to the rule. In reality, whether you’re thinking of purchasing or building new, commercial real estate is unlike any other industry or investment out there. It requires a lot of research, determination, and commitment to make a success of it; be sure you’re ready with all three of these before you invest your money in any venture.