Choosing Between Residential and Commercial Investments

The key differences between residential and commercial real estate investing in Canada. Here are three main takeaways:

• Residential real estate is more accessible for beginners, requiring lower down payments (as low as 5% for house hacking, typically 20% for investment properties) and offering simpler management, though with lower returns (5-8%).
• Commercial properties require higher initial investments (20-30% down, sometimes up to 50%) but can offer superior returns through longer lease terms and net lease structures where tenants cover various expenses.
• While residential properties provide more stable income during economic downturns since people always need housing, commercial properties are more vulnerable to economic fluctuations, as evidenced by their performance during COVID-19.

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