Owning a property can be a costly venture. Additional expenses pop up when you least expect it and can be surprising if you are not adequately prepared. Commercial properties often come with expensive upgrades and can hurt your budget. The following are just some of the additional expenses that can pop up when you own commercial real estate.
Business License Taxes
Many cities across the United States require commercial real estate property owners to purchase business licenses. If the property owner owns multiple properties across the same city, the state they are in might require them to hold a separate license for each property. Once these licenses are obtained, property owners may be asked to pay an annual registration tax for each license. They may also have to pay a mill tax, a flat rate, or a combination of both depending on the type of property.
Commercial businesses pay fees for water waste removal, just like resident property owners, the only difference is the bills are calculated based on flows and portable water consumption. Some cities also maintain their customers’ billings, and these levels are based on the discharge strength of the business. Depending on the property you own, sewer changes can cost upwards of over $10,000 a year.
Before purchasing a commercial property, ‘it’s crucial to conduct due diligence and understand the potential liabilities and ecological risks of the property. Failure to look into these issues can leave you with costly cleanups and expenses to make sure the property is contained if these issues should arise in the future.
Any commercial property owner knows that with the property comes a laundry list of property elements that need to meet code standards for the property to be deemed usable by the city and state. Meeting codes for electrical or fire systems, which are necessary for occupant safety and security, can be expensive if the systems are out of date. Changes to the property can also trigger specific code requirements to be met and require additional permits and additional costs.
Whether these costs are associated with the property when ‘it’s purchased, or build up over time, you should plan and budget for unexpected expenses when owning a commercial property.