Basic Differences Between Residential And Commercial Real Estate Investment

As is known to all, residential real estate is a building made for people to live in including houses, bungalows, flats, apartments and condominiums. It is solely for private, domestic or residential purposes. On the other hand, commercial top architects in Palm Springs is a building intended to make a profit from capital gain or rent revenue instances, office buildings, restaurants, hotels, motels, shopping malls, factories or retail stores. In short, you live in residential property while working in commercial property. Listed below are several factors used to differentiate between residential and commercial real estate investment.

In general, investing in a commercial property is always expensive than investing in a residential property. In addition, banks require a larger down payment in commercial market. Thus, commercial property investment requires a larger initial capital layout. Commercial property which is being valued higher also tends to generate more taxes than residential property. Nevertheless, commercial investment yields better than residential investment.

This is because it offers higher returns with less frequent tenant turnover as the commercial leases period is usually longer by having at least 3 years in length as opposed to residential leases period which is rarely longer than 1 year. Additionally, the commercial tenant is the one who responsible for all the repair and maintenance costs that might occur as they also hope for their business running smoothly. The residential tenant’s situation is different in that the landlord is responsible to repair anything that breaks in the house. So, it is not surprising that commercial property investments will have a higher yield.

A commercial lease agreement is more complex than residential lease agreement because it comprises many clauses that consider additional factors such as title and zoning issues, liens and hazardous materials which require careful attention. Therefore, a commercial property investor normally needs to seek help from external professional management. They need to rely on experts who have more knowledge and experience to look out for their best interest. These experts will also help the investor in negotiating a commercial lease with the seller.

Next, a commercial investment is more risky than residential investment because it can be affected by economic change. When economy slows down, a company is not able to sustain its business and will eventually go under and terminate their tenancy agreement. The property owner will need to find a new tenant to prevent himself from suffering a loss. However, it is so much harder to find a new tenant for commercial property as it is more specialized as compared to residential property.

Moreover, you still will not get a tenant even if you cut your rent in half. It is totally different when you will easily get a tenant if you decrease your rent by 10 to 20 percent in a residential property because people are still searching for a place to live regardless of the economic condition. Thus, if your existing residential tenant leaves, there is always a new possible tenant approaching you.

To conclude, it is hard to determine which investment is better because both serve different purposes in different situations. A person has to evaluate their own financial situation and personal objectives as well as making a deep research before venturing into these investment opportunities.

Not every roof is built the same, but even if we are talking about different classes of roof, there are still commonalities. Whether you are installing a commercial or residential roof, there are a wide range of materials and even styles from which you can choose. Another similarity amongst all roofs is the fact that damage can pose a significant risk to your building and its contents, not to mention the fact that roofing repairs can be costly. Nevertheless, there are some fundamental differences between residential and commercial roofs. So what is the difference between commercial and residential roofs? To answer this question we must consider roofing materials and design.

Materials and Style

There are some materials that are common to both residential and commercial. For example, each type of roof may feature asphalt or another type of shingle such as slate, tile, ceramic, or wood shakes. Moreover, there are metal roofing options for both commercial and residential design, and you probably would not be surprised to learn that there are commercial and residential examples of solar or built-up roofs. Still, there are some basic differences that distinguish commercial from residential roofs.

First and foremost, commercial usually have a flat slope while residential are much steeper. Moreover, the size of commercial roofs is generally much greater and this places different demands on the roofer. In fact, in many cases roofing specialists will focus most of their work on one or the other; while not impossible, it is less common to find a roofing professional that specializes in both commercial and residential design. That being said, some roofing companies employ experts with the necessary skills, knowledge, and experience to effectively offer both types of roofing repair or replacement to potential customers.


As mentioned, commercial roofs tend to feature a low slope, and in many cases they are entirely flat. On the other hand, residential are generally have a much steeper pitch, and their smaller size means there are different installation factors to consider. For example, flat typically require more frequent repair, and without proper maintenance they can be more susceptible to leaks. However, the materials and design of commercial roofs mean that pitched are not usually an appropriate choice. For example, commercial usually need to be able to hold more weight than a residential roof, and this difference can make maintenance and repair more costly or challenging.

Other Differences

In most cases, residential roofs are easier to install, repair and maintain. The majority of these kind of roofs have few fixtures, and contractors will only have to deal with a chimney and a few vents. On the other hand, commercial roofs usually have smoke stacks, air flow systems, and other elements of external piping that can make roofing work more complicated.

In an effort to grow their business, many residential air duct cleaning contractors look to the opportunities the commercial market offers. This is a natural progression, as residential contractors first add light commercial projects (one story office strips, etc.) and then add multi-story commercial projects (office buildings, schools, hospitals, etc).

There are differences, however, that the residential contractor needs to be aware of so they can plan and be prepare for this transition. These differences include:

  • Work Time: Residential projects are typically done during the daytime while most commercial products occur during the 2nd shift (4:00pm to midnight).
  • HVAC Systems: Residential heating, ventilating and air conditioning systems (HVAC) systems are relatively simple to understand and are modest in size while commercial HVAC systems are larger and more complex. You’ll deal with many more components like in-line heating coils, VAV boxes, fire dampers, turning vanes, internal insulation, etc.
  • Average Revenues: Residential project revenues will range from $300 to $700 depending on the services provided while commercial projects will range from $1,000 to 1,000,000 or more, with an average or $5,000.
  • Payment Terms: Residential work is great for cash flow because you get paid at the end of the project while payment on a commercial project can be 30 – 60 – 90 days or more. A good operating line of credit with a bank is needed to meet payroll and other expenses while you wait to get paid.
  • Project Cleaning Specification: Residential projects typically don’t have a cleaning specification; the contractor must satisfy the homeowner while most commercial projects have a cleaning specification. This cleaning specification tells the contractor what the project requirements are (experience, certification, insurance, bonding ability, cleanliness verification, etc) and what HVAC system(s) have to be cleaned.
  • Certification: None is required for residential air duct cleaning projects but certification can be a good marketing tool to separate yourself from the competition. More and more commercial project specifications are requiring the contractor to be a member of the National Air Duct Cleaners Association (NADCA) and to have at least one certified Air System Cleaning Specialist (ASCS) to even bid on a project. In these cases certification is vital for success!
  • Equipment: Commercial HVAC systems are larger and more complex. They need more and larger cleaning equipment so the contractor can be productive and profitable. Labor is the single biggest cost in commercial air duct cleaning so maximizing productivity and cleaning quality is very important.
  • Marketing: In the residential marketplace the contractor is marketing to homeowners while in the commercial marketplace the contractor is marketing his/her services to a variety of audiences (mechanical contractors, fire/water/mold restoration contractors and engineers/architects that write cleaning specifications, etc.).

Commercial air duct cleaning is a great business opportunity for residential contractors. To be successful however, good planning and preparation are necessary.

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