Commercial vs. Residential Real Estate

How does commercial real estate differ from residential real estate?
The main difference between Commercial Real Estate and Residential Real Estate is that Commercial Real Estate deals with Commercial Property, which “is buildings or land intended to generate a profit” while Residential Real Estate is property used primarily for housing.

Commercial property includes

“…office buildings, industrial property, medical centers, hotels, malls, retail stores, shopping centers, farmland, multifamily housing buildings, warehouses, garages, and industrial properties.”

Residential Real Estate deals with homes and property that are primarily meant for residences, for example single-family homes and apartments.

Degree programs, like the Real Estate Certificate, Bachelor’s and Real Estate MBA programs at Marylhurst University, will prepare you for a career that deals with both Commercial and Residential Real Estate. While it is possible for your career to deal with both distinctive types of Real Estate, it will be of greater benefit for you to specialize in both types of Real Estate.

Commercial Real Estate tends to involve more money and greater financial risk or leverage. Additionally, if you work in Commercial Real Estate, your clients will be businesses who are looking at Commercial Real Estate as a means of expanding their current operations or individuals who are interested in Commercial Real Estate as an investment opportunity. While this certainly does not describe every scenario that you will encounter in Commercial Real Estate, it should help you to distinguish between the two types of Real Estate quickly.

Alternatively, your clients and customers in Residential Real Estate will be individuals and families who are looking for a home or residence. Though they may be interested in developing their residence for tenants or so that they can rent it to other occupants, your primary clients will be interested in homes.

Another important distinction between Commercial Real Estate and Residential Real Estate is that Commercial Real Estate, on average, involves larger financial transactions. While this means more money, there is also more time involved in a Commercial Real Estate transaction. To illustrate this point: It is much easier to build and sell a 2-bedroom house than to build and sell a 40-story office complex.

What is important to know about Commercial Real Estate?
It is very important to understand that Commercial Real Estate is a broad term for many different kinds of real estate. Commercial Real Estate is further specialized into several different types:

Investment – Property that is primarily considered as an investment
Retail – Property or buildings that are used as shops or stores
Office – Property that is used for business tenants

Depending on the Commercial Real Estate brokerage that you enter, there will be specializations. Just as in many other professions, you will best serve yourself if you can focus your education and efforts within a particular Commercial Real Estate niche.

What types of Career Options do I have in Commercial Real Estate?
There are many different careers available in Commercial Real Estate, including:

Appraiser – Assesses the value of a commercial property
Investor – Develops commercial property as investment
Sales/Leasing – Represents buyers/sellers/tenants/landlords for commercial property
Mortgage Broker – Searches for lenders for commercial projects

While you may enter a career in Commercial Real Estate by acquiring a Sales Agent License, you will have greater access to career opportunities in Commercial Real Estate if you have acquired a degree in Real Estate first. Universities that offer degrees in Real Estate, like Marylhurst University, are your best options before beginning a career in Commercial Real Estate.

After you have a degree, you will want to start by looking at the small and large Commercial Real Estate firms in your area. Interview with as many of them as possible to get a feel for the kinds of guidance and training that they will offer you. While your education will certainly prepare you to enter the field of Commercial Real Estate, you will want to find a job that will offer constant and continuous education.

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