If you plan to lease property to set up a retail location, your leasing agreement will have important provisions which may impact your bottom line. It is likely your landlord will include language in your lease that obligates you to pay a certain amount to maintain the property.
Many landlords pass common area maintenance costs to their tenants. Often referred to as CAM charges, these costs can differ across landlords and communities.
Examples of CAM costs
Even though some maintenance costs are specific to a landlord, there are some CAM costs that your lease will probably include. Per The Motley Fool, here are a few examples:
- Lawn care
- Repairing parking lots and sidewalks
- Removing snow
- Paying for utilities
CAM charges can also cover indoor repairs. These include common hallways, bathrooms and building elevators.
Sometimes a landlord requires CAM charges that do not qualify as maintenance but are still important. You may find that your leasing agreement will have you pay for city permits, insurance for the property, and the costs to manage and administer the property. Additionally, your lease could require you to cover property taxes.
CAM charges may be beneficial
It is natural to worry that CAM costs will be a drain on your budget. However, CAM charges could also assist your business. A landlord who has to shoulder maintenance costs may be slower to make property repairs. Providing the maintenance costs yourself could ensure that problems such as a cracked wall or a damaged parking lot will receive timely attention.
Also keep in mind that different leases can divide CAM costs. Your landlord may end up paying for property taxes and insurance costs while you cover property maintenance. The variety in leasing agreements is why studying lease terms before signing is crucial.