Is it better to invest in commercial property or residential

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What is a safer bet, investing in commercial buildings, or investing in residential properties. If you become a local landlord to shops in a town, would that be better then if you had homes there?

Thank you.

[Mark B]

Originally posted by Bill Trefry:

I own two commercial properties. One I've owned for 24 months and out of the 24 month I have owned one of them has been vacant for 18 months. I'm lucky I own it free & clear.

Bill makes a good point that I have not seen mentioned here much. Commercial can be a riskier game because when a unit is vacant, it can be much harder to fill. For a given residential unit, there are many potential tenants - if you have a good price, you can fill it quite quickly. However, with commercial space, depending on how unique the building and use are, you may have to wait for the right tenant to come along.

I have a 5000 sf commercial building that is somewhere between office and retail and warehouse. My first tenant moved out suddenly (mid-lease) and I marketed for about 12 months before I got a new tenant. I also had to lower the rent quite a bit to seal the deal.

Meanwhile, right next door, I have a 4-plex and one unit became vacant at the same time. I advertised on craigslist, had an open house, had 12 showings, and 3 qualified tenants the first day.

All that being said, I think I prefer commercial believe it or not. Once a building is filled with tenants, it can be more profitable. I also agree with many posters that dealing with commercial tenants is usually more professional than dealing with residential tenants (less drama, less personal.)

Mark