Closing Costs

Runman · Dec 15, 2009

Hey everyone,

I was was just wondering what one should expect in typical closing costs for a commercial loan on a residential apartment building? Say a property that ranges in cost from 400,000 to 750,000 and 7 units to 12 units. What percentage should I use in my calculations so that I can be sure to have enough cash for closing. I`m assuming closing costs will include inspections, legal fees, finance fees, etc...

Thanks alot

Josh

Thomas Beyer · Dec 16, 2009

QUOTE (Runman @ Dec 15 2009, 10:42 PM) Hey everyone,

I was was just wondering what one should expect in typical closing costs for a commercial loan on a residential apartment building? ..
Legal fees 1: $5000 your lawyer
Legal fees 2: bank`s lawyer .. another 5K
Mortgage commitment fee: 0.8% to 1.25%
Environmental inspection: $4000
Property condition report: $3500
Insurance Review Fee: $500
Appraisal: $3000
your own time to drive/fly and donuts + coffee

those numbers are rough estimates, of course but are in the ball park.

Think of yourself as President Obama: everyone has their hand out and wants some money !!

mark186 · Dec 16, 2009

Does this include the CMHC $150/door application fee?

Thomas Beyer · Dec 16, 2009

QUOTE (mark186 @ Dec 16 2009, 01:09 PM) Does this include the CMHC $150/door application fee?
this is on top ... as is the CMHC fee which is a % of loan-to-value !!

Nir · Dec 16, 2009

Thanks Thomas great input. note Josh mentioned "enough cash for closing". Therefore, list should not include items which are added to the mortgage like $150/door.
Also, an important item which reduces cash required for closing is last month rents or adjustments/money you get. Cheers.

Runman · Dec 16, 2009

Thanks for the replys,
One question though, what percentage do you guys use for closing costs when running your numbers on a property? Say a percentage of the the selling price?
This will help me guestimate what my closing costs will be regardless of the final selling price. Hope I`ve made sense here.

Thanks
Josh

Thomas Beyer · Dec 17, 2009

QUOTE (Runman @ Dec 17 2009, 01:57 AM) One question though, what percentage do you guys use for closing costs when running your numbers on a property? Say a percentage of the the selling price?
on sales:
realtor commission (1.5% to 4% depending on property value)
legal fees - say $5000
mortgage discharge fees, if any (depends on mortgage)
any old repair bills from property manager that trickle in within 3 months of closing

Runman · Dec 17, 2009

Thanks Thomas