Commercial Real Estate Basics for Greater Boston Buyers

Buying a commercial property, whether a storefront for your own business or a mixed-use building as an investment, is very different from buying a home. The loans, leases, taxes and inspections all work differently, and the risks are bigger. This guide covers the basics so you can ask the right questions before you make an offer.

Main property types

Mixed-use buildings are common along main streets in Chelsea, Everett, East Boston, Revere and Lynn. Buildings with five or more apartments are usually financed as commercial property too. For one- to four-unit homes, see our guide to investing in multi-families.

Commercial lease types

In commercial real estate, the lease decides who pays for what. That has a huge effect on your income.

• Gross lease. The tenant pays one rent amount. The landlord pays property taxes, insurance and most maintenance.
• Triple net (NNN) lease. The tenant pays base rent plus its share of property taxes, insurance and common area maintenance. Income is more predictable for the owner.
• Modified gross lease. A middle ground: costs are split in a way the lease spells out, for example the tenant pays its own utilities and cleaning.

Always read the actual leases. Check the term, renewal options, rent increases, who repairs the roof and HVAC, and whether the tenant can leave early.

Cap rates for commercial property

Commercial buildings are valued mostly on their income. The cap rate is net operating income (NOI) divided by the price. A building with $80,000 of NOI priced at $1,000,000 has an 8% cap rate. Higher cap rates usually mean higher risk or a weaker location; lower cap rates usually mean safer tenants or stronger areas. Always verify NOI from leases, bank deposits and tax bills, not just the seller’s summary.

Taxes matter a lot. In Boston, the FY2026 commercial rate is $26.96 per $1,000 of value, compared to $12.40 for residential property. Under a NNN lease, tenants may pay much of that; under a gross lease, you do.

SBA loans for owner-occupied property

If your business will use the building, a U.S. Small Business Administration (SBA) loan may let you buy with less money down than a typical commercial loan. SBA loans are generally for operating businesses, not for passive rental investments.

SBA 7(a)

• Maximum loan of $5 million.
• Can be used to buy, refinance or improve real estate and buildings, as well as for other business needs.
• Terms up to 25 years for real estate.
• Made through banks and other SBA lenders.

SBA 504

• Long-term, fixed-rate financing for real estate and major equipment, with 10-, 20- or 25-year terms.
• Usually structured as 50% from a bank, 40% from a Certified Development Company (CDC) and 10% from the borrower. Newer businesses or special-purpose properties may need 15% to 20% down.
• The business generally must occupy at least 51% of an existing building, or 60% of new construction.
• The SBA portion is generally up to $5 million, or $5.5 million for eligible small manufacturers and certain energy projects.
• Cannot be used for speculation or to invest in rental real estate.

New for 2026: Since July 4, 2026, borrowers can combine 7(a) and 504 loans for up to $10 million in total SBA-backed financing, up from $5 million. Ask your lender how this applies to you.

If you are self-employed and want to understand how lenders look at your income, see our guide to self-employed and ITIN buyers.

Due diligence: what to check before you commit

Commercial offers usually include a due diligence period. Use it well:

1. Zoning. Confirm with the city that your planned use is allowed, how many units or what size is permitted, and whether you need a special permit or variance. Check parking and signage rules.
2. Environmental (Chapter 21E). In Massachusetts, Chapter 21E and the Massachusetts Contingency Plan can make current and past owners responsible for assessing and cleaning up oil or hazardous material. Former gas stations, dry cleaners, auto shops and industrial sites are higher risk. Most buyers and lenders order a Phase I environmental site assessment; a Licensed Site Professional (LSP) oversees any required cleanup.
3. Building condition. Hire a commercial inspector for the roof, structure, HVAC, electrical, fire safety and accessibility. See our inspections guide for the basics.
4. Financials. Review leases, the rent roll, operating expenses, tax bills and utility bills for at least two to three years.
5. Title and survey. Your Massachusetts attorney will check title, easements and any boundary issues.

Working with a commercial broker

A good commercial broker helps you find properties that may never hit public listing sites, reads the numbers with you, and negotiates terms like due diligence time, seller credits and lease assignments. They also connect you with SBA lenders, environmental consultants and attorneys who work on commercial deals. If you plan to sell an investment property and buy a commercial one, ask about a 1031 exchange early.

How Luis can help

Luis has helped Greater Boston business owners and investors buy and sell commercial and mixed-use property for more than 30 years, in English or Spanish. He can help you find the right building, review the numbers and build your team. Book a free 15-minute call on our commercial page.