Both commercial and residential properties give owners a way to expand investment opportunities and enjoy passive income, which is why many owners are open to owning both types of properties. When it comes to property management, there are some common themes between residential and commercial properties. Whether you’re a residential property owner looking to venture into commercial properties or vice versa, it’s important to understand the similarities and differences between the two.
Generally, tenancy types differ between residential and commercial properties. Residential properties refer to those that can accommodate up to four units and these are usually single family homes, condos, or duplexes occupied by tenants as living space. Residential properties can even be owner-occupied while still generating a profit from rental income.
Commercial properties, on the other hand, refer to buildings or land that is not designed for living space but is intended for businesses purposes. These properties typically have five or more units designed to be leased to separate business owners and include office buildings and retail space. Business owners rent commercial spaces from owners or investors and are designed to generate profit for both the owner and the tenant. Commercial property management also comes with higher expenses than residential management but these expenses are often passed on to the commercial tenants. Additional commercial expenses include but are not limited to, building maintenance, property taxes, and commercial property insurance.
Being aware of the differences between commercial and residential ownership is critical in hiring the right property management firm. Knowledgeable property management professionals will be able to navigate the often confusing world of commercial property management, saving owners valuable time and money that comes with self-management.
In larger commercial spaces like office complexes or shopping malls, on-site, full-time maintenance is standard. This contrasts sharply with residential properties that may only have a few tenants and may only require a handyman who works on an as-needed basis. In many cases, state law requires that commercial properties have on-site maintenance in place. Commercial maintenance needs to be organized, meaning the property manager will need to keep detailed records of ongoing maintenance requests, coordinate maintenance schedules, and advise tenants on how to initiate and track maintenance requests. A skilled property management company will be able to guide owners and ensure they remain in compliance with maintenance laws and ordinances.
Owner and Property Management Responsibilities Differ
Some may argue that owning commercial property management is a lot more difficult than residential property management, but this isn’t necessarily true. For owners and property managers, commercial properties may be slightly easier to manage than residential properties for a few reasons.
In general, commercial tenants shoulder a lot more responsibility compared to residential tenants. Since commercial properties aren’t designed for habitation, many of the laws that apply to residential tenants aren’t applicable to commercial tenants. Space for commercial use does not need to adhere to habitability requirements and the laws concerning eviction are completely different in commercial agreements. Additionally, most commercial properties are primarily used during daytime hours, so 24-hour maintenance isn’t usually required and late night noise complaints will be practically non-existent.
Leasing Is Simpler for Residential Properties
Another major component of property management – both residential and commercial – is leasing. In this case, residential leases are generally easier to execute than commercial lease agreements. Generally, commercial leases are more difficult to break an include several termination clauses that make it disadvantages to tenants. Commercial leases are more complicated, so it’s advisable to have a qualified property management team to deal with leasing details. Professional property management firms have the necessary tools, software, and skills to properly execute commercial leases, saving owners the hassle.
Choosing an Experienced Property Management Firm
One of the biggest mistakes an owner in Dallas can make is going into a commercial property ownership situation without full knowledge of what’s required. Navigating commercial property management is best left to professionals like those at Herman Boswell Property Management. The experts at Herman Boswell Property Management bring a wealth of knowledge and experience in both residential and commercial property management in Dallas, Texas, and demonstrate a clear understanding of owner and tenant expectations in both spheres.