Why Residential Contracts Do Not Work for Commercial Deals
Commercial real estate is not residential with bigger numbers. The structure is different. The risk is different. The language is different. Three major differences: Lease term length. Five to ten year commitments are common. Operating expenses. Taxes, insurance, maintenance, base year resets and expense stops can dramatically change total cost. Personal guarantees. Often required and negotiated. From my experience, business owners who rely on residential style thinking in a commercial transaction can expose themselves to significant financial risk.
