Differences in Commercial and Residential Structures
We all know that there is a big difference between commercial buildings and residential buildings. The design and the size are the obvious contrasts, making a commercial structure quite a bit more expensive in terms of materials, labor, and consultation costs.
Homes are generally built of wood, but commercial buildings are many times made of steel and concrete. The latter demands a much different infrastructure to operate, such as elevators, plumbing and electrical, and parking areas.
This post offers more economic distinctions:
Residential tenants are available regardless of the economic condition. This is because most people want to live and rent in places close to their friends, families, job location, educational institutions, etc.
Investing in rental homes also guarantees available cash flow and easier to rent. Even if a tenant leaves, there are always new tenants coming in.
Furthermore, it is easy to sell houses than commercial lots because demand from buyers is always there.
House rentals are determined by comparable market rates of similar houses in the area. Tenants pay their rents on a weekly or monthly basis depending on different countries.
The value of a residential property is calculated by comparing the market price of similar properties in that location. An appraiser is responsible for estimating the value of a house.
It is possible to buy a residential property with a small down payment and getting 90 percent or more mortgage financing from the bank.
Commercial properties tend to be more lucrative than residential because of steady returns and better cash flow.
Tenants in commercial properties usually pay expenses such as repairs and maintenance. This is because tenants want to run their businesses as good as possible.
The lease period are longer than residential, which translates into guaranteed long-term cash flow. Landlords can lease to a tenant for a specific length of time (e.g. 5 years) and then have the option exercised by the tenant to renew the lease for another period of 5 years.
The lease document itself is quite long and contains many clauses. You need to study the lease carefully and understand the terms with the help of a competent lawyer.
Unlike residential, leases are very important as these documents determine the price, value, and most importantly the rents of a commercial property. Tenants who have long-term leases can significantly improve the value of the property.
Stronger Commercial Building Guidelines
One of the biggest contrasts are the codes that are required for a commercial structure. One important aspect is that electrical wiring for commercial is wrapped in metal sheath as opposed to plastic.
Additionally, there are significant differences in the HVAC (heating, ventilation, and air conditioning) systems. Residential heating and AC are usually on the ground floor, but commercial is located on the flat roofing system and is much more complex.
Similarly, the plumbing material is the same for both but the size and variety of potential problems creates a lot more code to follow in commercial plumbing.
This video describes more on commercial building code vs residential building code:
Safety factors such as emergency lighting, smoke detectors, fire extinguishers, and installing exit signs are more specific to commercial code. Contractors also have to follow ADA (American Disabilities Act) for elements like bathrooms, doorways, and elevators in buildings newer than 1993.
Many times, commercial buildings use a drop ceiling to help insulate the sound between floors and make the area more energy efficient. The key is to check your city and county ordinances for codes that are specific to your area.
This site offers information on minimum building codes for the state of Colorado, but each area has their own list of rules to follow. For example, the city of Denver uses DenverGov.org to specify their requirements.
When you embark on a new building adventure, following the local guidelines will keep you and other occupants safe. If you don’t have time to study these complex codes, you can always call a Denver building contractor, as it is their job to keep up with the residential and commercial building codes.