Q: Is residential and commercial property management different?

Ask A Pro Definitive answers to your property management questions

Q: Is residential and commercial property management different?

Q: Is residential and commercial property management different?

Is there any distinction between residential and commercial property management?

-Kalispell, Montana

answer-icon-masterResidential and Commercial Property Management While there is some overlap, of course, a commercial property manager is going to have to have a lot of different skill sets and a body of knowledge that is different from a property manager who only manages residential property.

However, only a few states have a separate set of licensing and educational requirements to engage in commercial property management, as opposed to residential property management. 

Want to Find a Local Property Manager?

Montana, your home state, requires a separate license to do property management. You can’t just conduct property management activities with a garden-variety real estate agent’s license (but you still need a real estate license to engage in leasing and brokerage activities).

Some jurisdictions, like Kansas, consider commercial management activity that covers leasing to be a ‘covered activity,’ while residential management that includes leasing activity is not covered under their regulatory and licensing regime

Utah, for example, allows non-licensed individuals to engage in commercial property management if they work as employees of the property owner. 

Differences in Skill Sets and Knowledge

The real difference between commercial and residential property management becomes evident in the field, though, because commercial property managers must keep tabs on a vast array of regulatory and insurance information that just doesn’t come up for people who manage apartment buildings. 

For example, what chemicals does a light industrial company leasing space in your commercial building store on site? Do they potentially cause a hazard to neighboring homes and businesses? Will a new waste disposal company leasing property on your site require specific gray water drainage? What specific access control measures and other security equipment and procedures are necessary for a given work area? Are you having a restaurant facility built in an office park? Are there specific requirements for restaurants that you just don’t encounter with your other units that are just plain office buildings? Is drainage adequate? Will your sewage and septic system handle a restaurant facility in a building designed for office space? What about a car wash? 

What insurance coverage do you need in place? Your coverage is going to vary a lot with the industries represented in a given commercial policy – but your standard residential landlord’s insurance policy isn’t going to cut it. 

Commercial property managers have to conduct risk assessment on a whole different level than residential property managers and owners. Because of the vast array of commercial and industrial activities that take place within a commercial property, there are just more things that can go wrong, and a broader array of possible hazards. 

Start Simple

If I were just going into property management as a rookie, I would not want to hang out my own shingle as a manager of commercial properties unless I could hire some serious experience on staff. Even then, I’d want an ace property and casualty insurance agent in my corner and be prepared to pay significant liability premiums. 

I’d start out doing residential property, learn the basics, and branch out from there as I developed expertise and built my team. 

Alternatively, I’d start out as an employee of an established commercial property management company, and cut my teeth in all different aspects of the operation. Then try to go get accounts (that is, join the sales team) so I got a chance to go look at hundreds of different properties and speak to the landlords about their concerns, both on sales I make and sales I fail to make.

Only then would I want to hang out my own shingle doing commercial property management. The exceptions would be small retail properties like strip malls on main drags, where business is likely to be limited to straight ahead, plain-vanilla restaurants, retail stores and office space. 

Meanwhile, read as much as you can about energy efficiency and green energy initiatives, because that’s a hot topic in commercial management. 

You can also start taking the coursework for the Accredited Commercial Manager designation (ACoM), offered by the Institute for Real Estate Management, though you do need to have 12 months of experience actually working in the commercial real estate management field to qualify. 

And if you are starting from scratch, check out this Ask a Pro article: Q: How do I become a property manager?

Author Bio
Writing about personal finance and investments since 1999, started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.
Author Bio for Jason Van Steenwyk

Can't Find an Answer?

Submit a new question and
get a Professional answer