One of the biggest mistakes many businesses make when evaluating their real estate purchase is underestimating major expenses associated with the transaction. We are Canada’s business development bank and the only financial institution dedicated exclusively to entrepreneurs. Our mission is to help create and develop strong Canadian businesses through financing, consulting services and securitization, with a focus on small and medium-sized enterprises.

1. Understanding hidden costs
when buying commercial real estate
One of the biggest budgeting mistakes many businesses make when evaluating their
commercial real estate purchase is underestimating—or worse, entirely missing—major
expenses associated with the transaction. To avoid this potentially costly budgeting
pitfall, make sure you’re taking these factors into account.
FOR SALE
Purchase costs
Purchase costs include more than just the price
of the property. You may have to spend a significant
sum on due diligence, such as an environmental
assessment, a building condition assessment,
an appraisal, a title search.
Renovations and repairs
Renovations may be needed to make the site
suitable for your business. Big-ticket items can
include, the roof, the foundation,
windows, siding, plumbing,
electricity, heating, ventilation,
air conditioning.
Closing
costs
Closing the deal costs
typically involve, land
transfer tax, legal fees,
realty commission,
sales tax, prepayment
penalty (if you have
an existing mortgage).
Moving costs
It’s also important to consider the cost of moving
furniture, equipment and inventory, setting up
phones and Internet, making signs, marketing your
new address, cleaning up any site contamination
or hazardous building materials, and repairing your
existing location to return it to its original state.
Downtime
Be sure to calculate the
cost of any ramped‑up
production needed
to build inventory
to ensure uninterrupted
supplies to customers.
Permits
You could also face costs to resolve
any permit and zoning issues,
encroachments, and easements
identified during due diligence.
Operating
costs
Utilities, property tax, insurance and maintenance,
such as snow removal, janitorial services,
landscaping and property management.
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