Updated about 2 months ago on . Most recent reply
Commercial Landlord vs Residential Landlord
Hey everyone,
Thought it would be interesting to get some other perspectives on being a commercial landlord vs residential landlord.
The biggest difference between the two are the types of tenants, businesses vs people living there. The second biggest difference is the lease structures:
Most of us understand standard residential leases, tenants sign, pay rent, and call you when the sink leaks.
But in commercial real estate, where the tenants are businesses the lease looks very different:
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-Longer lease terms 3–10 years is common (vs. 12 months). Stability cuts vacancy risk.
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-Tenants may pay taxes, insurance, and maintenance (NNN lease) or split costs in other ways. These details directly impact NOI.
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-More room to negotiate rent, renewals, build-out costs, it’s all on the table. Nothing is “standard.”
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In CRE, the lease is the foundation of the property's value. Two identical buildings can be worth drastically different amounts depending on the leases inside.
Understanding lease terms means understanding risk, cash flow, and ultimately resale value.
If you’ve invested in both residential and commercial, what stood out to you most about the difference in managing leases and who are your favorite tenants?