What Is the Difference Between Residential and Commercial Property Management?


Whether you’re starting out in property management or looking to advance your career in real estate, you should understand the difference between residential property management and commercial property management. There is a lot that goes into the day-to-day activities, so understanding the different factors involved in each will help you effectively manage the property. Keep reading to learn more about the difference in residential vs. commercial property management.

What is Residential Property Management?

Residential property management refers to the management of residential real estate properties. These are private properties, such as shelter and basic living space, intended to serve the needs of individuals. Most residential real estate properties include single-family homes, condos, co-ops, and multi-family homes that house less than 5 tenants.

What is Commercial Property Management?

Commercial real estate involves properties or buildings intended for commercial use, or commerce. These locations facilitate trade and usually house businesses like office space, retail shops, and properties used for business-related activities. Multi-family housing is technically considered commercial real estate.

Commercial vs. Residential: Key Differences

The function of the day-to-day activities of commercial real estate and residential real estate properties differ significantly. Here are a few of the main differences a property manager will face at either a residential or commercial property:

Tenant Payments

Residential tenants have their main expense, which is paying rent. They also have to pay additional fees for utilities like electricity, water, and gas. Commercial tenant expenses include rent, but may also include property taxes, insurance, and maintenance, which are known as the three nets or “triple-nets.” 

Legislation & Leases

A residential property is subject to a variety of consumer-protection laws that vary from state to state, as well as federal laws such as anti-discrimination statutes. Property managers are responsible for ensuring the rental property is up to code. Failure to abide by these laws can land a manager and/or property owner in a great deal of legal trouble.

Commercial leases are typically far more complex and contain a greater number of variables and an assortment of termination clauses than residential leases. Commercial rental agreements can be done on a month-to-month basis or annually and are easily renewable. In contrast, commercial real estate properties have far fewer legal restrictions than residential real estate properties.

On-Site Management

Though residential property managers are required to be available to your tenants, you don’t have to be on-site. However, in most U.S. states, commercial property managers are required to be located on the property site. In either case, it’s always best to have an easily accessible website where tenants and property owners can contact the property managers at any time.

Having an experienced property management company is vital to the success of your building. Whether you’re looking for commercial or residential property management, Quantum Residential is the multifamily property management team that is here to help you succeed. Contact us for more information.

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