When it comes to real estate, the two main categories are commercial and residential. But how to tell the difference between each one? Follow along to learn more about commercial and residential properties.
What Is a Residential Property?
At its most basic, a residential property is a property used mainly for residential purposes.
Whether it’s a single person living in an apartment or a large family living in a mansion with lots of pets, the principle is the same. If the property’s fundamental use is as living quarters, then we are talking about a residential property.
Some examples of residential properties include:
- Single-family homes
- Condos
- Apartments
- Townhouses
- Duplexes
- Multifamily residences
- Vacation homes
What Is a Commercial Property?
As the name suggests, the essential goal of a commercial property is to generate profit. This can happen either through capital gain or rental income.
Put another way, commercial properties are used for business purposes such as selling or storing merchandise (in the case of warehouses and stores), or charging people to live in the property (in the case of rental properties).
Common examples of commercial properties include;
- Retail stores
- Office buildings
- Multifamily housing
- Warehouses
- Garages
- Mixed use
- Restaurants
If you are interested in learning more about commercial real estate, be sure to check out our previous blog posts: “Owner-Occupied Commercial Real Estate: a Definition,”C1 Commercial Zoning: Definition and Examples.”
How To Tell Whether a Property Is Commercial or Residential?
The difference between commercial and residential properties is the basic purpose they serve. Residential properties are mainly used as dwellings for individuals or families. Commercial properties, on the other hand, are geared toward business uses.
When you need to determine whether a property is commercial or residential, just ask “What is the basic purpose of the property?”
If the property is used for profit-generating activities, then you have a commercial property, even if someone lives in it, as is the case with rental properties.
Disclaimer: This material is for general information and educational purposes only. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.
SoCal CRE Team: The Experts in Southern California Commercial Real Estate
At SoCal CRE Team, we specialize in finding commercial real estate solutions for developers, investors, landlords, and tenants in the most sought-after Southern California markets such as Los Angeles, Orange County, Riverside, Anaheim, and more.
Interested in learning more? Contact us today by telephone (714) 456-0500 or email at gary@ashwillassociates.com.
