Residential vs Commerical Preleased Investments

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Post By By Buniyad


While investing in property it is important to analyze the returns that your investment will bring! In recent times investors have made a great shift towards pre leased property, given the benefits pre leased properties carry with themselves! They offer a secure and advantageous edge over non pre leased property. 

Pre leased properties are a great option because-

  1. They promise instant return on investment 
  2. It is easier to get loans for investing in them
  3. They are appreciating assets
  4. They are low risk investments

If you wish to dive deeper into the benefits, we at Buniyad have broken down the perks of investing in pre-leased property in detail for you over here! 

The bifurcation of pre leased property into commercial and residential brings a great question in mind- which of the two is a better option? 

The holistic answer would depend on what you seek from your investment. If your prime focus is good income through rent- your answer in simple words would be commercial pre leased property! There are many reasons why as an investment, commercial pre leased properties are better, which we will break down for you below-

1. Tenants for longer duration

While renting out space to an office or a business franchise, it can be taken into account that the organisation has a long term goal in mind before setting up at your location. 

It is more likely that the said organization is here to stay for long, with more commitment, compared to those leasing your property for residential purposes. 

2. Higher rent 

Pre leased property promises instant rent, and in the case of pre leased commercial properties, it is seen that the rent generated is higher than that generated by residential options. 

3. Maintenance 

If your property is leased out to franchises that welcome customers into their space- your tenants will ensure the maintenance of your property as it is also a matter of their reputation!

4. Easier loans 

Comparing the two, it is easier to avail loans for investing in commercial pre leased property. They have a more stable reputation as a source of income hence are a better liability. 

5. Faster Recovery 

Given that commercially pre-leased properties promise more rest, with more stability too, it is easier to recover the cost of your property in comparison to residential pre leased properties. 

The average rental yield of commercial pre leased property varies from 6 to 9 percent whereas that of residential pre leased property comes around 1.5-4 percent. 

It is, therefore, evident that if your primary aim is to make your investment a source of income, then commercial pre leased properties would be your go to solution! 

Individuals who have different aims in mind, such as investing in property for personal use in the future- may look into investing in residential  pre leased property!

There are advantages of doing so too- as you start generating revenue from day one of owning your pre leased property- and in the future whenever you need your investment for personal use, it is all ready to be yours!  Though the revenue generated would be less, it will reap the common benefits that preleased properties provide. 

Overall, the better investment choice comes down to your individual requirements. It’s wise to go over questions like-

  • How fast do you wish to recover the cost of your property?
  • How would you like to use this property in the future?
  • What are the benefits you are looking for in your investment?

For personalized and professional guidance before you make your investment decision, our team at Buniyad is here to answer all your property related queries!

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