Commercial Property Closing Costs
Paul Kondakos | Posted on Monday, May 29, 2017 at 2:10PM 
I thought this might be of interest to any budding commercial investors.
I'm just closing on a multi-unit residential property located in Ontario and was putting together the closing costs to determine the adjusted cost base. Let me tell you ... it ain't cheap!
Some details on the purchase:
- Located in Cambridge, ON (Only Ontario Land Transfer Tax applies)
- CMHC insured property (Significant premium but very low interest rate ... low 2's)
- 12 Units
- Purchase Price of $1,325,000
If you're thinking of getting into a commercial property here are actual closing costs that were incurred for this transaction which closed today (May 29th).
| Land Transfer Tax (only ONT.) | $22,975.00 | |
| My Lawyer' Fees | $6,833.09 | |
| CMHC Premium | $56,686.50 | |
| CMHC Application Fee | $1,800.00 | |
| Bank Admin Fee | $2,898.00 | |
| Insurance Review | $423.75 | |
| Environmental Review | $150.00 | |
| Cheque Certification | $25.00 | |
| Bank' Lawyer' Fee (Yes you pay!!) | $5,162.79 | |
| Phase 1 ESA | $2,938.00 | |
| Total |
$99,892.13 |
|
So on a $1.325M purchase the closing costs are approx. $100,000 or 7.5% of the purchase price. Keep in mind that the CMHC premium is added to your mortgage so it is not a cash outlay upfront but you still end up paying for it in the long run.
The crazy thing is that if you structure the deal properly, multi-unit residential properties are still one of the greatest long term investments.
Author: Paul Kondakos, BA, MBA, LL.B - Professional Real Estate Investor
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