What Should You Do After You Buy a Commercial Property?

The deed’s recorded. The wire cleared. You own a commercial building.

Most buyers celebrate, then wing the next three months.

That’s when small misses turn into expensive ones. An insurance gap. A tenant still paying the old owner. A tax bill that doubles and nobody saw it coming.

The first 90 days set up the next ten years. Here’s the checklist.

The Short Answer

After you buy a commercial property, work through four stages:

• Day one: secure the building, confirm insurance, transfer utilities.
• Week one: notify tenants and vendors, and get rent flowing to you.
• Month one: check your property tax situation and start on the due diligence repair list.
• Months two and three: set up maintenance, reserves, and your books.

None of it is complicated. All of it is easy to skip.

What Should You Do on Day One?

Treat it like moving into a new house, with higher stakes:

• Change locks and access codes. You don’t know how many keys the previous owner handed out over the years.
• Confirm your insurance is active. Your lender almost certainly required a policy in place at closing. Make sure it covers the building, liability, and anything specific to how you’ll use the space.
• Transfer utilities and service accounts. Power, water, trash, alarm monitoring, and internet should be in your name, not the seller’s.
• Do a walk-through and take photos. Document the building’s condition on the day you took it over. If something breaks next month, you’ll know whether it was already broken.
• Set up emergency contacts. A plumber, an electrician, and an HVAC company you can call at 2 a.m.

Our HVAC contractor has the last one covered. Most buyers don’t.

What If the Building Has Tenants?

Then you have a few extra tasks, and they’re time-sensitive.

• Send a new owner notice. Every tenant should get a letter with your name, contact info, and where to send rent starting now.
• Confirm security deposits transferred. Deposits should have moved to you at closing as part of the prorations. Make sure the amounts match the rent roll and estoppel certificates.
• Introduce yourself. A short call or visit goes a long way. Tenants worry when a building sells. Tell them what’s changing and what isn’t.
• Build a lease calendar. Renewal option deadlines, rent increase dates, and expense reconciliations should all live in one place. Missing a deadline in a lease can cost real money.

If a tenant pays the old owner after closing, it’s usually not malice. Nobody told them where to send it. Fix that in week one.

Why Could Your Property Taxes Go Up?

Because in many places, a sale resets the assessment.

A previous owner who held a building for 15 years may have been paying taxes on an old, low value. Your purchase can change that. In California, for example, Proposition 13 requires county assessors to reassess property when it changes ownership, according to Moss Adams. Other states have their own versions of the same reset. 

Math time (illustrative):

• Seller’s last annual tax bill: $9,000
• Your purchase price: $1.2M
• Assume a combined tax rate of 1.1% on the new value
• Your new annual bill: $13,200
• Increase: $4,200 a year

Budget for the higher number from day one, not the seller’s old one.

And watch the deadlines. If the new assessment comes in above what the property is actually worth, you can usually appeal, but the window is short. In Maryland, for example, owners who buy between January 1 and June 30 can file a new owner appeal as long as it’s within 60 days of closing, according to Ryan. Ask a local property tax advisor what applies to your county. 

If you lease to tenants on triple-net terms, the higher tax may pass through to them. Check what their leases actually allow before you assume it does.

How Do You Set Up the Building for the Long Haul?

Once the urgent stuff is handled:

• Work the due diligence list. Every issue the inspection flagged, from the roof to the parking lot, goes into a dated plan with a budget.
• Create a maintenance calendar. Roof inspections, HVAC servicing, fire system checks, and parking lot repairs all have a rhythm. Put them on the calendar before they put themselves there.
• Start a reserve fund. Set aside money every month for the big repairs that will come. The roof doesn’t care that you just closed.
• Set up your books. Keep the closing statement, purchase agreement, and every improvement invoice. Your CPA will need them for depreciation, which for commercial buildings runs over 39 years.
• Ask your CPA about a cost segregation study. For some buildings, it can speed up depreciation on certain components. Whether it’s worth it depends on your situation.

Recap

• Day one: change locks, confirm insurance, transfer utilities, photograph everything.
• If you have tenants: send new owner notices, verify deposits, and build a lease calendar in week one.
• A sale can reset your property tax assessment. In our example, taxes rose $4,200 a year.
• Appeal windows can be short, as little as 60 days in some places.
• Set up a repair plan, a maintenance calendar, reserves, and clean records.

Final Word

Buying the building was the hard part. Owning it well is the long part.

The first 90 days decide which kind of owner you’ll be: the one who knows every lease date, every tax deadline, and every system in the building, or the one who finds out when something breaks.

Make the lists. Set the calendar. Then you can go back to running your business, from your own building.

Browse commercial listings at hutfin.com.