Sunday, May 31, 2009

Before signing a commercial property lease

Dear Property Manager:

My best friend has decided to open a preschool in the Concord, (North Carolina) area and I am considering going into a partnership with her. We have both owned our own businesses before, but never leased a space. We have looked at several locations together but haven’t made any decisions. My biggest concern is just not knowing enough about commercial leases. What do we need to do before we sign? Does Kuester have any available properties in Concord?

Thank you so much for your help.

Sheryl J. Concord, NC

Hi Sheryl,

There are several things you need to know before signing a commercial lease, yet the biggest thing is to review the lease thoroughly. Read it, review with your attorney, and ask any questions, and get clarification before committing. Below are some of the most important points:

1) Before reviewing the agreement, make sure that you are listed properly as one of the parties. Many do not look closely at this, yet it could cause a huge headache later on. Also remember, to avoid liability, if the company is a corporation or an LLC, the company name (not your personal name), should be what appears on the lease.

2) Discuss the length and rent. Note when the property owner will be raising the rent and negotiate the terms to where you & your partner feel comfortable. Just because it is written on the lease, does not mean you won’t be able to make some modifications in your negotiations.

3) Evaluate the security clause carefully and ask who is responsible for securing the premises, if there is a security system (or can one be installed), and if the landlord has access to the leased space, (and under what conditions).

Best of luck and yes, we do have properties in your area that would suit your needs well. You can find all of our commercial property listings, in Concord, Boone, Myrtle Beach, Charlotte, and Fort Mill at Please let us know if there is anything we can be of assistance with as you look at properties.

Property Manager
Kuester Property Management:
Serving Concord, Fort Mill, Charlotte, Myrtle Beach, & Boone

Wednesday, May 27, 2009

Property Management Business

Dear Property Manager,

I have been the property manager for my own small commercial property that I own in Raleigh, NC and I am considering growing my business to include other properties. I really enjoy this work and would like to take on several more clients, but I am not sure how to go about getting more properties to manage. What are the sources for clients for a Property Management company? How do I go about approaching them?

Patrick K.
Raleigh, NC


It is of course, easiest to manage properties that you own yourself, but if you are looking to grow your property management business you can look at several sources for potential clients.

HOA's - A community or homeowner association may have properties that are rented on a long term or short term basis, and they would be a good client for you. Look at the developments in your area and see if they currently have a contract with a property management company.

Condominium associations - Large condominium complexes may hire in-house management staff, but the smaller complexes are likely to hire an outside property management company. Talk to the condo builder about utilizing your services.

Vacation Properties - Rental properties in vacation and resort areas, are often managed by a property management company. Call on the property owners to discuss the benefits of hiring a manager to handle the rentals, maintenance and security.

You can take your business in a couple different directions, or handle all of these types of property management. Remember that No matter which of these specialties a real estate property management company may pursue, there is a growing market for efficient and knowledgeable property management professionals. Yet it takes experience and dedication to be a good property management company.

Best of luck to you as your pursue this career.

Property Manager

Friday, May 22, 2009

Commercial Real Estate Property Management

Dear Property Manager:

I own a small commercial property in Boone and need to hire a property management company to handle the daily upkeep and maintenance, as this quite a distance from my Charlotte home. What are the main responsibilities of a property manager, or management company? And is it appropriate to ask for references?

Alex K

Dear Alex:

In commercial real estate property management, the property manager (or the management company) is responsible for the marketing of the property, the tenant's satisfaction and occupancy (keeping it filled), administration and the facilities, and managing the financials.

The goal of a commercial property is ultimately to make money and the property manager, or property management company is the owner’s partner in making this happen. You should choose a company that can show strength in finances, as well as success in marketing, and references from current and past clients. Look at references especially from properties similar to the size and location of yours.

After completely looking into references and capabilities you should choose a property management company with whom you will work well, and whom you trust to represent you.

Choosing to hire a professional property management company is a benefit, and good financial decision for many commercial property owners.

Please give Kuester in Boone a call today at 803.578.7725 to learn more about our services in your area.

Property Manager
Kuester Property Management
Boone, NC

Wednesday, May 20, 2009

Commercial Lease Terms

Dear Property Manager,

I have decided to take my home-based book-keeping, and virtual assistant business and move it into a small office. My problem is I don’t know any of the “lingo” or what the clauses in the commercial lease contracts mean. Is there a place I can look or a list of the most common commercial lease terms?
Thank you for your help –

Madeleine Y.

Boone, NC

Dear Madeleine,

Here are some important terms with which you will need to familiarize yourself before signing your commercial lease, however, you will also want to work with a real estate attorney, who will assist you in getting the details of the contract right for you.

Use Clause: How the space can and cannot be used. Ask any question if this is unclear, and make sure that this clause is as fair to you as well as to your new landlord.

Exclusive Clause: Limits competing businesses from opening up in the same complex, or next door, if the landlord owns the other property/spaces in the immediate vicinity.

Premises: The premises should be defined clearly to be just the building, or space, or also include the parking lot or facility, bathrooms, kitchen, etc and spell out common areas shared by other tenants.

Parties: “Parties” refers usually to the landlord and tenant, (“lessor” and “lesee”) and should specifically name you in the contract. (Make sure to verify the names for correct spelling, etc.)

Term Clause: The length of your lease and specifically the starting and ending dates. This should begin after you have all necessary insurance and are ready to start business, not necessarily on the day the contract is signed.

Rent: Specifically states rent, and if it isn’t otherwise state should include improvements and maintenance costs if you are responsible, as well as rate increases or the “fixed rate’ cost.
Security Deposits: What amount you are required to give the landlord as a deposit. This is a safety measure for the landlord in case you miss a payment, or break an agreement, such as the state of the space, (maintenance needed) after your move out. If there are no issues, then this amount will be returned to you, unless otherwise stated.

Build-outs (Improvements and Alterations): If your new space will have to be customized to fit your needs, the lease should address this. The landlord may require an agreement about who does the design, contractors, timeline, payment, etc. This is important if your space isn’t move-in ready.

Insurance Clauses: Your landlord may require a specific kind of insurance (property, liability, rental interruption, and/or leasehold), to insure against things that are beyond their control (and sometimes yours). You will want to discuss your specific needs with a business insurance broker.
Other Clauses: Parking, Signs, Landlord’s Entry, and Security: There will (or should) be several paragraphs about whether you can put up signage, and the requirements there-of, as well as when and how the landlord can have access to your space, where you and your staff and customers can park, and the security of the property.

The key to successfully leasing a commercial property is to review all of the possibilities with an experienced attorney. Ultimately, you want to avoid surprises. Try to ensure that all of your business needs are covered and that you can run your business comfortably for the term of the lease.

Good luck and remember that your team (accountant, broker, commercial real estate agent, and attorney) will be vital to finding the right property and negotiating the right terms for you and your business. Make sure you heed their advice, or seek a second opinion if you are unsure. Signing a commercial lease is a big responsibility, and can ultimately lead to the success of your business.

If you would like to talk to one of our commercial property specialists in your area, please call our Boone, NC office at 803.578.7725.

Property Manager
Kuester: Boone, North Carolina

Friday, May 15, 2009

Options in Commercial Real Estate Leases

Dear Property Manager:

My one-year lease is almost up on my new business. I was given a discount on the price by the landlord since I was a new business, which has helped a lot, but it was only a 1-year term. Things are going well, and we have steady growth. I am trying to figure out what the best option is for me—whether to stay, or go, what the rent price will be etc. Can you tell me what my options will be if I want to stay at this location? The lease is up in August, and I know I need to handle this soon, but I am going into my busy season and have so much on my plate right now… help!

Dakota J.
Concord, NC

Dear Dakota,

Congratulations on your business success – and good luck on your exciting future!

When your commercial real estate lease is coming up, you are several options. The first option would be to renew, however, since landlords will want to raise the rent at the end of the initial agreed period, and you were given a “starter-business rate,” you will need to handle this immediately. If you can get an option to renew at a great fixed price, you may want to try to extend your lease term to 3-5 years to avoid the possibility of rent going up again this time next year.

You could also choose a short lease, (if your commercial landlord will grant you one) with one or more options to renew to give you some flexibility. In this case you will probably have a certain block of time before the initial lease term ends in which you can notify the landlord that you wish to renew. Be aware there may be an additional fee.

Another option you may wish to consider is the option for additional space, so that you can grow and expand your business. If the landlord believes in your business and your ability as a tenant to attract other businesses of interest they may offer you this additional space at a deep discount. Good luck again, and make sure you take the time to handle the details of your commercial lease as soon as possible. Where your business is located, and the ROI of that is paramount to the success of your growing business. If you would like to look at other property options in the Concord area, or discuss your options, feel free to call our Concord office at 704.973.9017.

Property Manager
Kuester Property Management
Concord, NC

Sunday, May 10, 2009

Can I Get Out of a Commercial Lease?

Dear Property Manager:

I and leasing a commercial property in Boone and business has slowed down quite a bit in the last year. I am looking at cutting costs, and my lease in my biggest expense. I do not think that I need as much space as I needed a year ago, and by moving into a smaller space, I will be able to save money.

Is there a way that I can get out of my commercial lease?

Rob K. Boone, NC

Dear Rob,

The answer is "it depends." Your lease may allow you to sub-lease. If this is the case, it is usually the easiest and best way to get yourself out of that space. You will still be obligated to pay the rent, but your tenant will hopefully be paying the full cost. If you are able to do this, you will probably have to get your landlord to approve the subtenant, so check with them before you go down this road.

The other two options require that you directly negotiate with the landlord. The first is a "buy-out" option where you offer to pay a negotiated lump-sum payment to the landlord, less than your remaining payments, but still more than just the next month's rent. This option may work depending on how flexible the landlord is and whether they feel they will be able to fill the vacancy quickly.

You can also work with the commercial property landlord, letting know that the payments have become a hardship. Given the current economic situation, your landlord may choose to work with you to get you into another smaller space, or even let you stay in the current one, at a reduced price, instead of risk you defaulting on the lease and then not being able to find a new tenant right away. The key is being honest about your situation and being willing to negotiate, perhaps increasing the term of the contract.

We wish you the best of luck, and continued success.

Property Manager
Boone, NC

Tuesday, May 5, 2009

The Relationship between the Board, HOA Management and the homeowner

 It is sometimes found in the Charlotte HOA management industry and beyond that the property management company is looked at as the "bad guy" due to the requirement that it send written notification to homeowners where there is a violation of the Association Covenants and Restrictions. Most times, the first contact that a homeowner may receive from one of our Charlotte property managers at Kuester is a courtesy letter.  This letter is not a violation notice, just an initial communication from us to let the homeowner know that something might be going on that they need to look at before it gets worse.  When communicating with homeowners, we constantly encourage them to remember that we are contractually bound to partner with the Board of Directors in its fiduciary duty to uphold the Association's Covenants and Restrictions in the manner that is described by South Carolina or North Carolina homeowners association law.  We always strive to work in a friendly manner to meet the challenge of dealing with homeowner’s concerns or possible escalating problems by acting as mediator so neighbors need not deal with neighbor issues.  In the South Carolina and North Carolina property management and HOA management industry, we feel our superior communications and service make us the best.  Give us a call today at 888.600.5044 to discuss how we may be of assistance to your community or homeowners association.  You can also visit our website.

Should I Buy a Franchise?

Dear Property Manager:

I was laid off a year ago after 27 years with the same company. I have been looking for another job for several months, to no avail. I have a bit of money saved up and I think that this might be the right time to be my own boss. I am considering purchasing a franchise. Can you tell me what to look for in a franchise that would make it a good opportunity? Is this something that will support me moving forward?

Hale W. Concord, NC

Dear Hale,

You can determine if a franchise opportunity is a good one, by going through the check list below:

Franchise Opportunity Checklist

1) Is there growth potential? Do your due diligence and research this one! The franchiser will provide some information, but you also have to look at the specific location you are considering. If there are already several sandwich shops near that corner, then you need to consider a new location, or a new business.

2) Does the franchise have a strong management team? How long has the team been at the franchise? What are they like to work with? Ask other franchise owners, and meet the management team yourself and determine if they are people you respect and can work with long term.

3) Is the franchise growing? Is the franchise you are considering a healthy one with year over year increase in units?

4) Does the franchiser provide the assistance and training you will need? Different franchises have different systems and support. Yours should be a good match with what you are looking for.

5) What do the other owners think? Are the other franchisees happy with their decision to buy and run the franchise? Talk to several and get their opinions about the good/bad things about the franchise.

6) What kind of marketing & advertising support does the franchise offer? Does the franchiser set up a website for each franchise, do print media or TV ads? Is there a budgeted amount of advertising dollars that you can use? What restrictions/freedom do you have as the franchise owner to advertise your business?

7) Can you make enough profit? Some franchises will sustain themselves and turn a tidy profit. Others are part-time undertakings, at least initially. Check with the franchiser for estimated investment and earnings, and talk with other franchisees to see if they are satisfied with the net.

8) Are the financial records detailed and sound? Have your accountant review the franchise financial statements to determine the strength and possible longevity of the company as a whole. Are decisions being made that are in the best interest of the franchisees?

9) Are you treated with honesty and respect by the franchise? When you talk to owners, management, and others in the franchise, are you given timely and adequate and candid responses?

10) Does the franchise fit your personality and fulfill your passion? To be successful, no matter how financially sound the decision may be, you will have to chose a franchise that you have a connection with—one that suits you and your personality. If you are a health food fanatic, a fast-food chain may not work for you. Think about the company and the product/service and how well you will represent each other.

Good luck with your decision!
Property Manager
Myrtle Beach, NC

Saturday, May 2, 2009

Should I Buy a Commercial Property?

Dear Property Manager,

I have been considering purchasing a building for my web development business. Currently we rent our space, but it seems like a good time to buy and stop having to pay rent, and maybe rent out a little space and make some money as well.

Would this be a good decision? I don’t know anything about commercial real estate in the Boone area where we are now.

Chris K. Boone, NC

Dear Chris:

Many people have wondered if owning their own business location would be a good idea. The answer depends a lot on your business and financial situation, and also on your willingness to handle the responsibilities of property ownership in addition to running your business. Interest rates at near historic lows, and property costs also low, creating an opportunity for savvy entrepreneurs.

Owning your commercial property location does offer many benefits. As you pay each mortgage payment, you'll build equity –instead of having it go to rent you will never get back. And if the property value appreciates, you could make a significant amount of money when you go to sell. Since you will be the landlord, you will have control over the space – giving you the freedom to do any build-outs you wish, paint the walls purple to match your company logo, or add an employee’s lounge/patio out back! You could even decide to lease un-used space to tenants, creating an additional revenue stream.

Additionally, as the owner of your commercial property, you can make maintenance repairs on your own schedule and you won’t have to worry about rent going up next year, and the year after!

To buy your property you will probably need 20% of the value in cash. If there are tenants already in the space, you will need copies of their signed leased for the lender, and insurance against damage or loss. You will also want to consult your attorney and accountant before making any decisions. There are serious financial, legal and tax implications associated with commercial property ownership.Before finalizing your decision to buy, consider your cash situation, not only for the down payment and the mortgage payments, but for any needed repairs, maintenance or upgrades that will need to be done. Also consider what you will do if your own business outgrows the space: Will you be able to rent it and move into a bigger building? Is the location a good one for future tenants?

It is a buyer’s market, and no might be a great time to buy your commercial property. But before you take that leap, weigh all the pros and cons, and make the best decision for you and your business.

If you would like more information about the available commercial properties in Boone, or learn about property management services, please call our Boone, NC office at 803.578.7725.

Property Manager
Kuester Companies
Boone, NC