Who typically carries more debt as a percentage of total property value in real estate ownership?

Residential property owners often carry more debt as a percentage of total property value compared to other entities in real estate ownership. This is largely due to the structure of financing in residential real estate, where individual buyers commonly seek mortgages to fund their property purchases. These mortgages are typically high in relation to the overall value of the home, as buyers may put down a relatively small percentage (such as 3-20%) as a down payment, financing the rest through loans.

Moreover, residential properties are frequently acquired by individuals or families rather than corporations or large organizations, which may have more capital available or prefer to minimize leverage. This dynamic causes residential property owners to leverage their investments more heavily, leading to a higher ratio of debt to property value.

In other sectors such as commercial real estate, governmental entities, and non-profit organizations, the financing structures may involve different ratios of equity to debt, with these entities often having access to alternative funding sources or revenue streams that allow them to maintain lower levels of debt relative to their property values.