# 369. Stop Buying Rental Houses. Start Buying Commercial

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Text version: https://stenobird.com/podcast/the-commercial-real-estate-investor-podcast-1247143/369-stop-buying-rental-houses-start-buying-commercial.md
Podcast: [The Commercial Real Estate Investor Podcast](https://stenobird.com/podcast/the-commercial-real-estate-investor-podcast-1247143)
Published: 2026-04-02T10:00:00+00:00
Episode link: https://www.tylercauble.com/podcast/episode369
Audio file: https://static1.squarespace.com/static/5c115fec9d5abbba78a23c93/t/69cd84090d26dd7c20fc8cd9/1775320030500/Stop+Buying+Rental+Houses.+Start+Buying+Commercial.mp3
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Duration seconds: 2544

## Resource

Key Takeaways: Residential rentals are squeezed Average profit is only about $713/month per house. Rising interest, insurance, and maintenance costs are outpacing rent growth. ~ 80% of landlords self‑manage , effectively creating a low‑pay second job. Residential is hard to scale Short 12‑month leases mean constant turnover and risk of bad tenants. Property value is based on comparable sales , so you’re largely “praying for appreciation” and dependent on neighbors and timing. Commercial real estate advantages With triple net (NNN) leases , tenants often pay taxes, insurance, and maintenance . Longer leases (3–10+ years) with built‑in rent bumps = more stable, predictable income. Forced appreciation : raising rents or filling vacancies directly increases value via higher NOI . Better tenants, better risk profile Tenants are businesses , not individuals: rent is a business expense . You can get financials, personal guarantees, and corporate backing , and freely say no to weak applicants. Same purchase price, very different returns A $500k house example: ~ $45/month net, ~ 0.4% cash‑on‑cash . A $500k small NNN commercial building example: ~ $825/month net, ~ 7.9% cash‑on‑cash , plus upside from forced appreciation. Transition strategy Don’t fire‑sale your portfolio; stop buying new weak residential deals . Sell problem properties first , use 1031 exchanges into small commercial buildings. Start with smaller commercial deals ($300k–$1M) to learn and scale.

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