The Pros And Cons Of Residential Real Estate

by - 7/31/2017 08:41:00 PM

When most people say they’re investing in real estate, they mean they’re buying a house or an apartment of some sort. The question is, is residential real estate right for you? There are other options out there, such as investing your money commercially or in land.

To help make sense of the situation, here are the pros and cons of residential real estate compared to the other two options:


There are many positives to investing in residential real estate. The first one that springs to mind is that it’s easy to make money via different avenues. If you purchase a house, you’ve got a lot of options at your disposal. You can improve it and sell it again within a year, or you can rent it out. Either way, it’s a lot easier to do this than if you bought a commercial building or land.

The second positive point is that you potentially gain something from the investment. For example, you can buy a house and then live in it for a few years. As you’re living there, the price will gradually increase, and you can sell it when the market improves to a point where you’ll make a profit. With the other options, you can’t really do this. You can’t live on land unless you spend more money building a house, and you can’t stay in an office building!

Thirdly, there are more options available when you’re looking for residential properties. There’s simply a larger market out there, and it’s easier for you to find a property that represents a good investment opportunity.


While there are loads of positive reasons to invest in residential real estate, there are some negative aspects compared to the other options. With commercial real estate, the main way you make money is by leasing your space to businesses. As such, you’re dealing with companies rather than individuals. So, you may be able to charge more for rent, meaning you can make more money every month.

Residential real estate is also a highly, highly, competitive market. While there are different ways of making money, you will have a lot of competition from other investors trying to do the same. You’ve got to make your property look the most desirable to buy/rent, and this can be hard. Whereas, with something like land investment, it’s not as competitive and people are eager to purchase land.

If you bought a timeshare as a real estate investment, you might be surprised to learn that unlike traditional real estate, timeshares typically do not increase in value. In fact, a timeshare loses about 50% of its value the second it is purchased. Avoid timeshare purchases for investment opportunities at all costs and seek a resort release to save money over time. 

Finally, selling a property can be a long and arduous process, much longer than selling land is. You may need to deal with people applying for financing, and it could take months after you accept a bid for your property to sell.

You see, there are pros and cons of a residential real estate. Deciding if it’s the right path for you depends on your current situation. If you have the money, why not consider other real estate ventures instead? Or, you can always invest in a new home and then wait for the right time to sell it. Either way, hopefully, this article has helped you realize what you’re up against if you invest in a residential real estate.

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