Commercial Real Estate Investing: The Costs of Being Your Own Tenant

Investing in commercial real estate can be a worthwhile investment, especially when you are an owner/occupant of a building. Why pay rent to someone else when you can pay yourself?

But being your own tenant is not without it’s challenges. If you decide to purchase a building to occupy, there are a few things to keep in mind. You will now be responsible for paying all of the bills. Loan payment, taxes, repairs, building updates, and additional fees are just some of the common commercial building expenses. These fees may differ if you are a part of a condo complex, in which case you will need to pay condo fees, which often include operating expenses for common areas. Additional condo expenses often include property management fees, condo administrative costs, as well as real estate taxes and insurance.

Property management responsibilities do not end once the bills are paid. If you own a standalone building you will be responsible for any landscaping maintenance as well as snow removal. In addition to those new duties, the driveway, parking lot and sidewalk are also now your duty to maintain.

If you are not going to be an owner occupant you may purchase commercial real estate for investment purposes. The passive revenue from tenants can offset the charges incurred from property maintenance. In addition to the items above, you will need to determine if you will be able to carry the loan payment if you do not have a renter in the building.

All of these questions and more can be answered by speaking with a commercial real estate professional. Give us a call and we’ll walk you through the process.

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