The prospect of owning your own historic commercial property is exciting for a number of different reasons. You can add to the culture and history of the community, uphold the rich background of the property and the neighborhood, and take on the rewarding responsibility of something significant in more ways than one. In addition, the built-in tax benefits of owning a historic property can add another layer of interest.
However, owning a historic commercial property also comes with a lot of work and many tasks to take care of before you sign the dotted line. The amount of work and money required to maintain a historic property can vary based on its condition. If you go in prepared, though, you can save yourself major headaches, not to mention some extra cash.
Here are some things you need to keep in mind before you invest in a historic commercial property.
Preservation Easements Are Binding
What setting up a historic preservation easement does is protect the historic integrity of the property you’re interested in in perpetuity. You will pay a qualified preservation organization to hold the easement, which is a legal instrument that puts down restrictions on what can happen to the property. It also requires future owners to keep in step with them.
Maintaining a Property is Pricey, to Say the Least
If the property you own needs extensive repairs, this means that you’ll be forking over some major dollars. And this isn’t just an upfront issue as repairs over time that may pop up can cost just as much. If you want to own a historic property, be prepared to dip into savings to take care of repairs and replacements.
To help out, there are state historic preservation offices that offer grants or tax programs for property owners, up to 20 percent in some states.
Financing Can Be Difficult
You may not be able to invest in the complete price tag for a historic commercial property. But there are many different options when it comes to financing your historic property purchase. Some lenders might be a little reluctant if there are extensive repairs, but it shouldn’t completely shut things down.
Insuring the Property
Like owning a home or a car or renting a nice apartment, owning a historic commercial property comes with the need to cover it with historic property insurance. Insurance companies that don’t specifically offer coverage for a historic property may be reluctant to sell you a policy based on the possibility of heavy repair costs, for example.