<\/span>What Are The Types Of Carrying Costs?<\/span><\/h3>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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The type and amount of carrying expenses may vary based on the type of property, but the main categories are as follows.<\/b><\/p>

Property tax<\/u>: Cities charge taxes on land use and services such as garbage and water collection. Property taxes are levied annually and can slowly increase over time.<\/b><\/p>

Insurance<\/u>: Depending on the type and location of the commercial property, landlords may be required to purchase different types of renters insurance.\u00a0<\/b>Most of them have some form of general liability to protect you from monetary losses due to accidents that may occur.\u00a0<\/b>Other companies may have special policies for things like flood wind\/fire damage, etc. Some premiums must be paid for each policy, usually annually or semi-annually.<\/b><\/p>

Property Management<\/u>: Maintaining commercial real estate is a lot of work every day. Typical tasks include giving tours for new tenants, basic maintenance, collecting rent, and landscaping.\u00a0<\/b>In most cases, this is done by an external property management company, which charges a property management fee equal to a percentage of the property’s total income.\u00a0<\/b>For some rental properties, an in-house management team carries out these operations, saving you money in the long run.<\/b><\/p>

Maintenance<\/u>: Routine maintenance activities include air filter replacement, cleaning of common areas, tree trimming, window washing, snow removal, and heavy washing.\u00a0<\/b>You may also need to perform large (and therefore more expensive) maintenance tasks less often.\u00a0<\/b>Think of things like replacing a roof or fixing a parking lot. These activities are intended to keep the building in good condition which helps to preserve the value of the property over time.<\/b><\/p>

Debt Service<\/u>: Most commercial real estate is financed with a set amount of loan that must be repaid to the bank or the lender over time.\u00a0<\/b>The exact mortgage payment depends on the amount requested by the borrower, the interest rate, the closing cost, the sales price, and the term of the loan. These are usually monthly costs.<\/b><\/p>

In most cases, these fees are paid by the landlord, and depending on the lease agreement with the tenant, some or all of the fees may be refunded as part of the tenant’s monthly payment.<\/b><\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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<\/span>Conclusion<\/span><\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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Carrying costs are post-purchase costs necessary to finance the day-to-day operations of rental real estate. <\/b><\/p>

Examples of common expenses include property taxes, insurance, maintenance, and property maintenance and administrative expenses. <\/b><\/p>

The carrying cost of an asset is an important part of the net operating income\/cash flow calculation that determines the value of an asset. <\/b><\/p>

Therefore, underestimating the carrying cost of maintaining a property can add up over time and result in a lower-than-expected return on your investment.<\/b><\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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\n\t\t\t\n\t\t\t\t\t\t\n\t\t\t\t\t\tGet Today's Best Home Equity Rates<\/span>\n\t\t<\/span>\n\t\t\t\t\t<\/a>\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

About Carrying Costs As a real estate investor, there are a lot of costs that you might have to take into consideration before buying a property.\u00a0 Apart from the down payment, broker\/realtor fees, closing costs,… Continue Reading What Is Carrying Costs And Its Importance? – The Expert Overview<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":19838,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":""},"categories":[39],"tags":[3491,47,65,61,62,3494,3493,3492],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/www.compareclosing.com\/blog\/wp-content\/uploads\/2022\/11\/0_What-Is-Carrying-Costs-And-Its-Importance-The-Expert-Overview.jpg","_links":{"self":[{"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/posts\/19814"}],"collection":[{"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/comments?post=19814"}],"version-history":[{"count":5,"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/posts\/19814\/revisions"}],"predecessor-version":[{"id":19843,"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/posts\/19814\/revisions\/19843"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/media\/19838"}],"wp:attachment":[{"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/media?parent=19814"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/categories?post=19814"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.compareclosing.com\/blog\/wp-json\/wp\/v2\/tags?post=19814"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}