The Top 6 reasons to buy commercial real estate

commercial real estate

Sick of tenants who couldn’t care less about your property? Tired of dealing with all of the headaches and hassles that come with residential property management? If this sounds like you, then maybe right now is the time to give commercial real estate investing a go?

Here are the top 6 reason to switch over from residential real estate to commercial real estate

1. Lower price per square foot. Price per square foot can be lower, and in downtown Vancouver it is right now! Believe it or not, you can pick up a nice downtown Vancouver commercial office property for less than $1000/ square foot. Try doing that with a residential investment property!

2. Long term tenants. With residential property management, tenants generally last a year or perhaps a few if you’re lucky! Only if you are charging well below market will you generally keep any tenants long term! Commercial tenants will generally sign 5 year leases, with 5 year extensions. It is not uncommon to have the same commercial tenant for 10 or 15 years. Keep in mind that it’s their place of business, so if business is good, why move? It can be very expensive for businesses to move, and most tenants will only do so if absolutely necessary.

3. Triple net leases. This is a huge advantage for commercial real estate over residential real estate. The tenant not only pays you rent, but they also cover your taxes, utilities, and operating costs! Imagine if your residential tenant did that? Not a chance! Most won’t change a lightbulb without trying to have you pay for it.

4. You will be dealing with professionals. Commercial property management is a business, and you will be dealing with other business people, unlike in Residential property management where you are sometimes dealing with people who can be anything but professional.

5. Commercial tenants don’t have the same rights as residential tenants. You will be dealing with contracts, which explicitly detail everyone’s rights and responsibilities. Courts will typically side with the landlord in commercial litigation, as the leases are generally written by the landlord. This is much different that in residential property management, where even if you have a lease agreement in place, the tenant can do things that border on illegal, and you still can’t evict them in many cases. With a commercial contract, you can simply lock them out if they don’t fulfill their obligations.

6. Tenants take care of the property. Remember again that it’s their place of business, and there is financial incentive to have it look as good as possible. It’s not uncommon for commercial tenants to invest tens of thousands of their own money into your property. Residential tenants have no such incentive.

As you can see, there are quite few good reasons to go commercial! If you need any help finding a place, please contact us here.

Be sure to read our recent post about the things to watch out for when buying commercial real estate here, as there are a few traps to watch out for!

Chris Stepchuk

March 18, 2018

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