By Tim Vi Tran, | Jan 26, 2026 | Representing Buyer, Representing Landlords

Commercial vs Residential Investment: Why an Investment in Commercial Real Estate Beats a Residential House

To watch this short intro to a full case study as a 2-min video

To listen to this short intro as a 2-min podcast

A seasoned Bay Area investor came to The Ivy Group with a familiar dilemma:

“I have extra funds. Should I buy a house and rent it out—or should I invest in a commercial building?”

On paper, a $1 million rental home in a strong residential neighborhood seemed like the safe bet. There was even talk of turning it into an Airbnb to chase higher nightly rates. At the same time, an industrial warehouse condo in Newark, off Dumbarton Court, came onto Tim Vi Tran’s radar. Same dollars, very different assets.

Rather than answer with a quick opinion, Tim pulled the question apart. He sketched two columns—residential versus commercial—and walked the investor through each line: lease terms, turnover, rent control, operating expenses, financing, tenant behavior, and long-term value.

In one column (residential): 12-month lease, a single rent check to cover every owner expense, frequent move-outs, and growing regulatory pressure on rental housing.

In the other (commercial): 3–5-year lease with automatic annual rent increases, triple-net reimbursement of taxes and operating costs, and a tenant base that treats rent and repairs as business expenses.

The numbers told one story. The real turning point came from a different set of questions:

• How involved do you want to be as a landlord, month after month?
• Whose cash flow should really carry surprise repairs and upgrades—you or your tenant?
• If you can afford to be patient, what kind of tenant can you attract, and how does that change the building’s value?

In the full case study, you’ll see how those answers led away from a single-family rental and toward a Newark industrial property leased to a $25 billion public company, through a deliberate “bridge” tenant, disciplined underwriting, and a tenant-selection process shaped by Tim’s own experience as both residential and commercial landlord.

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About The Ivy Group
The Ivy Group specializes in commercial sales, leasing, and investment advisory across Fremont, Silicon Valley, and the Greater Bay Area. With over 100 years of combined experience, expertise and designations including SIOR and CCIM, The Ivy Group provides strategic guidance for complex transactions in commercial real estate.
When you need to sell, buy, or lease, The Ivy Group is ready to help you reach your goals. Contact us with your next real estate needs.