Costs to Consider as a Commercial Property Owner

Image of an industrial building

By opening themselves up to commercial properties, real estate investors can broaden their opportunities and their income potential. While there are many advantages to investing in commercial property, there are some costs to consider before you move ahead.

Initial Investment

Commercial properties come at a higher price point than residential properties, which means that you will need more money to invest in the project. For some individuals, attaining financing for such a pricey investment may pose a difficulty.

Depending on the property, you may need to make repairs or upgrades before it can be rented out to tenants, which would represent an additional upfront expense.

Time Commitment

If you own a single-family house, you have a single tenant. With a commercial property, you probably have multiple tenants to deal with, as well as general public, who may be visiting your tenants. It requires a greater investment of your time and your physical presence as well; this isn’t a situation where you can be an absentee landlord and earn passive income from a real estate investment.

Facility Maintenance Costs and Upgrades

Commercial properties require significantly more maintenance and upkeep than residential real estate. Even if you consider yourself handy, the work may be too much. Consider that you will need to take care of cleaning and exterior landscaping as well as make sure that all the building systems are in good order. When a major system like roofing or HVAC needs an upgrade, you’ll have to bring in a pro. Since a commercial buildings are usually much larger than a house, you can expect increased costs for upkeep.

Risk

It’s always important to prepare for what could go wrong so you have a plan in mind to fix things. With commercial real estate, risks to consider include slip and fall accidents (especially during the winter when it’s icy or snowy), parking lot auto accidents, theft, and vandalism. You’ll want a plan to deal with each of these so you aren’t caught unawares; for instance, you will need to hire a snow removal crew before the first storm of the season hits. If you consider yourself a risk-averse person, then residential real estate may be a better choice.

Brandstetter’s Kanga Roof can assist with commercial roofing services including roof repairs, roof replacement, and analysis. Contact us to get an estimate for commercial roofing services.