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Hidden Costs to a Commercial Investment Property

hidden-feesBuying a commercial investment property or any other fixed asset for the matter is tricky in every sense of the word. It’s doable for sure but it takes not just knowledge and hard work but also a lot of care and caution so as to ensure perks not losses.

One of the primary tasks that any investor faces when making such acquisitions involves financing. Truth be told, there are a lot of costs that come with commercial properties and you’d be surprised that a good number of them may not present themselves early.

What many buyers assume is that the expenses that they’ll have to face will only be that of the asset’s selling price including a security deposit and a down payment. In the real world, there’s more and here’s a list for your information and perusal.

  • Surveys and Valuations

Prior to closing on the asset, you’ll be hiring a professional to examine about condition, value, potential, age, depreciation and more. You’ll need them both to validate seller-given information as well as uncover other important details that will help in your decision making process.

  • Loan Applications and Establishment Fees

This cost pertains to the fee added by the bank when you apply for a loan or some other type of credit. In some cases, this can be waived or discounted but not all the time. It’s important to ask and include it in the budget.

  • Legal Fees and Document Costs

The preparation of various legal documents, the contract and title and ownership registrations for example, will also bear costs. This is an expense that must be dealt with because you can never skip the legalities or else you’ll end with a terrible headache later.

  • Property Taxes

The costs to owning a commercial property investment doesn’t end when you pay the seller. You’ll be dealing with more, taxes being one of them. These are levied by the government so their rate depends on where the asset is situated.

  • Ongoing Costs

Repairs and maintenance expenses also belong to the category of expenses that are spent post-acquisition. They are needed in the upkeep of the asset and form part of the regular expenditures when owning such an investment.

There are actually more to add to this list but these are the basics that you should know, at least for now. Good luck in shopping for your commercial property investment.