Moreover, lenders may require more money for a down payment on a mortgage for commercial real estate than for a residence. Unlike other investments, real estate is dramatically affected by its surroundings and immediate geographic area; hence the well-known real-estate maxim, "location, location, location." With the exception of a severe national recession or depression, residential real estate values in particular are affected primarily by local factors, such as the area's employment rate, economy, crime rates, transportation facilities, quality of schools and other municipal services, and property taxes.
Individuals shopping for a mortgage to invest in real estate in the form of an owner-occupied home are faced with a variety of options.
Moreover, just as land can appreciate in value, it can also depreciate.
Once-hot retail locations have been known to decay into rotten shopping centers and dead malls.
On the one hand, residential real estate is usually less expensive and smaller than commercial real estate and so it is more affordable for the small investor.
On the other hand, commercial real estate is often more valuable per square foot and its leases are longer, which theoretically ensures a more predictable income stream.
For more, see: Home ownership, also known as owner-occupancy, is the most common type of real estate investment in the United States.