Commercial vs Residential

Residential property scales poorly. You are responsible for every blocked toilet. Commercial property operates on Net Leases (NNN), where the tenant pays the outgoings.

The Shift to Commercial

Most investors begin in residential because the barrier to entry is lower. The transition to commercial usually happens when the investor realizes that Net Yield in residential is awful.

Metric	Residential	Commercial
Lease Term	12 months	3-10 years
Outgoings (Taxes/Insurance)	Paid by Landlord	Paid by Tenant (NNN)
Value Driver	Comparable Sales	Yield / Cap Rate

Calculate commercial valuations using our Cap Rate Tool.