by Danny Iannuzziello
First time buyers frequently ask me about other costs associated with purchasing an apartment building, so I thought I’d try to address some of those questions here.
ARRANGE A NEW MORTGAGE
1. Mortgage Broker: 0.5% - 1.5% of the loan amount
2. Lenders’ fees: Between $2,000 to $8,000 depending on size of building.
3. Lenders’ lawyers: Between $2,000 to $5,000 plus disbursements.
ASSUMING AN EXISTING MORTGAGE
1. Assumption fee: Approximately $500 to $3,000 depending on size of project.
2. Lender’s lawyer fees: Between $1,500 to $3,000.
COSTS YOU SHOULD BUDGET FOR:
1. Environmental Audit: $1,500 -$2,500
2. Structural Report: $1,500-$2,500
3. Appraisal: $1,500-$3,000
4. Land Transfer Tax: Approx. 1.5% of Purchase Price
5. Buyer legal fees: $1,500 -$5,000
OTHER POTENTIAL COSTS
1. Fire Retrofit Consulting Reports
2. Elevator Consulting Reports
3. Mechanical Inspection Reports
4. Electrical Audits
Adjustments are made depending on when you close. Typical adjustments include rent, prepaid rent, interest on prepaid rent, taxes, utilities, etc.
You should also note and budget for utility companies asking for deposits from new building owners and lenders asking to pay for Realty Taxes , thus asking buyers for a surplus in the account.