As North Atlanta property management experts, we’re called upon to manage all sorts of properties. While our team specializes in residential rental homes and apartment buildings with 100 units or fewer, we have the capacity and the expertise to manage any type of investment, whether it’s commercial or residential. 

Investing in properties is a smart way to build your wealth. However, it requires not only a substantial amount of money but also a great deal of knowledge in how to identify and then lease and manage properties. In North Atlanta, property investment has been booming over the last several years. There’s a growing population and a high demand for quality rentals. 

Whether you’re an experienced real estate investor or just starting your journey into real estate, you need to understand the differences between residential and commercial property management. 

We get a lot of questions from real estate investors who wonder where to put their money, and we always recommend a diverse portfolio of different property types. Today, we’re talking about how we handle residential vs. commercial investment properties in North Atlanta and why you need a local property management expert in order to make smart decisions about where you invest and what you buy.

Understanding Investment Property Types 

Let’s start with the obvious.

The first major difference between residential and commercial property management is the types of properties that fall into each category. 

• Residential properties generally consist of single-family homes, townhouses, condos, and multi-family buildings such as apartments and duplexes. 
• Commercial properties, on the other hand, can vary greatly and include spaces where businesses are set up to run their operations. They might be office buildings, shopping centers, warehouses, parking lots, or storage centers. 

Each property type requires different management approaches, skills, and expertise.

Tenant Occupancy and Relationships

Another important difference in residential and commercial investment property management is the way you might interact and relate to your tenants who are occupying that property. This is a factor to consider for many reasons. First of all, there are the differences in tenant occupancy. Residential properties usually have one primary tenant group, while commercial properties may have multiple tenants, each with their specific needs and requirements. 

The length of the tenancy will be different depending on the type of property you’re renting out. A residential lease is often for one year. At the end of that year, you and your North Atlanta tenants will have the option to renew the lease agreement. If the lease does not renew, your existing tenant will move out and you’ll have to prepare the property for a new tenant. 

Commercial tenancies tend to last longer. Depending on the way you structure your lease, you can expect to have your tenants in place for at least three to five years; potentially even longer. 

The way you spend your time managing tenant relationships will also be different. Residential property managers typically handle marketing, screening, accounting, and bookkeeping, as well as lease renewals and maintenance issues. There is ongoing communication with tenants, and the relationship includes rent collection and lease enforcement. Commercial property managers are less hands-on. There’s still a strong tenant relationship in place, but most of the interaction comes while dealing with lease negotiations, rent collections, and maintenance of the entire complex.

Laws and Regulations

The regulations that apply to residential and commercial properties differ. as well 

Residential properties follow federal, state, and local laws, such as fair housing laws and fair credit reporting requirements. There are also specific requirements and disclosures that must be included in lease agreements. The state of Georgia has a legal eviction process that must be followed when you want to remove a tenant, and as a property owner, you’ll be held to habitability and safety standards. 

Commercial properties must adhere to zoning regulations and occupancy permits. They must comply with the requirements of the Americans with Disabilities Act (ADA) so that buildings are accessible. There will also be more stringent safety codes and inspections. Commercial property management may also involve more legal issues, especially if there are tenant disputes, conflicts around the lease agreement, or liability issues.

Estimating your Return on Investment

The return on investment (ROI) for residential and commercial properties varies. Residential properties typically have lower purchase prices and provide steady but relatively low rental income. Commercial properties will often have higher purchasing prices but can deliver higher rental income and long-term appreciation. However, commercial properties may also have higher operating costs, which can affect the ROI.

Vacancy risk is also a factor. If a tenant leaves your single-family rental home, you’re completely without rental income until you find another tenant. But, if you’re renting out a commercial office building and you have six different tenants, you’re less likely to feel the financial shock of one tenant moving out. 

When it comes to North Atlanta investment properties, there are excellent opportunities in both the commercial and residential markets. You’ll need to review your investment goals to get an idea of how your cash flow and long-term earnings will play out depending on the type of property you buy.

You should also expect the management fees for residential and commercial properties to differ. Whether you invest in buildings or in homes, you’ll want to make sure you understand the value and the cost of the services you receive from your property manager. 

Always work with a North Atlanta property management company, regardless of the property you invest in. A good management partner can help you earn more and spend less, whether it’s a home you’re renting out, a handful of apartment units, or a commercial space. 

North Atlanta has a thriving property market, and understanding the differences between residential and commercial property management is crucial to your investment success. 

Choosing the right type of property management strategy depends on your investment goals, your experience, and your management approach. It’s essential to work with a reliable property management company that understands the unique needs of your property. With this knowledge, you can make informed decisions that lead to successful investments in North Atlanta.

We’re here to be your resource. Please contact us at Elite Property Management when you have questions or ideas about where you want to invest.