Aug 22 • General discussion
Residential Vs. Commercial Real Estate (Book Rec.)
I recently read "Crushing it in Apartments & Commercial Real Estate" by Brian Murray & It definitely expanded my view point on investing in real estate - as someone who's only investing in single family...
🚨One of the biggest differences between residential and commercial real estate is how properties are valued.
- In residential, value is based on comps (what similar houses sold for).
- In commercial, value is based on income and expenses using the cap rate formula.
🏠That means small changes in management can lead to huge jumps in property value.
For example, in the book’s case study (page 87):
- By increasing income by just $13,000 (through things like higher rents or extra fees)
- And reducing expenses by $3,000 (tightening management and costs)→ The property’s value jumped from $276,917 to $460,758.
✅That’s nearly a $184,000 increase in value without adding a single unit—just smarter operations.
This is why commercial investors love cap rates: they reward efficiency, not just market appreciation.
❓QUESTION FOR YOU: Do you find yourself more drawn to residential strategies (like flips and rentals) or does commercial feel more appealing knowing you can “force” appreciation like this?
Want to read the book? - Find it here: https://amzn.to/4oOG9DB
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Residential Vs. Commercial Real Estate (Book Rec.)
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