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
Showing posts with label rent. Show all posts
Showing posts with label rent. Show all posts
Wednesday, May 20, 2009
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
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
Friday, December 26, 2008
Do I Really Need a Property Manager?
Dear Property Manager:
I recently bought an investment property--the building my office was in (I am a CPA) and I have been renting out the units. This has become too difficult a task for me to do on my own, but I am not sure if the next step is hiring someone part-time (I don't think it is a full-time job...) or find a property management company.
Can you help give me some information on the benefits of hiring a property management company?
Steve N.
Dear Steve,
This is a great time to invest in property, but as you have learned, managing and maintaining that property can be quite an undertaking. We have compiled the Top 10 Reasons to Hire a Property Manager to explain some of the benefits for you.
Top 10 Reasons To Hire A Property Manager
1.) Money: Collecting money from tenants and making deposits can be a huge headache. Not to mention make you unpopular, or put you in an awkward position (especially since you have an office on the same property!) A property management company will have a proven and tested system in place to collect rent and maintain on-time payments.
2.) Legal: There is a many laws and regulations that you are going to need to abide by when renting and maintaining your rental property. There are local, state and federal regulations, and a property manager can help you avoid legal problems later by keeping your property current and in compliance with these regulations.
3) Rental Rates: A property manager can insure that your rental rates are competitive--they know the market and how your property stacks up, so that you can keep your investment full and bringing in cash flow.
4.) Marketing: A property manager will bring experience in offline and online marketing, as well as local direct mail, and other advertising opportunities. This will increase the exposure of your properties, and work to keep them filled.
5.) Inspections: A property manager will coordinate routine inspections before a tenant moves in and after a tenant moves out, which can find problems before they grow into huge expenses, and make sure they are repaired in a timely manner.
6.) Finding Tenants: Securing tenants can be a time consuming process. Depending on the extensiveness of requirements for your rental properties, a property manager can take care of securing all criminal background and security checks, credit reports, employment verification, and previous landlord references. In addition all tenant disputes, conflict resolution and emergency maintenance will all go through a property manager, who will involve you at his or her discretion. In addition,
7.) ROI: Most property managers charge a percentage of the monthly rental rate which can range anywhere from 6-10%, however, given the professional expertise and services provided coupled with time saved, gives you a positive return on investment.
8.) Time: A property manager handles the routine daily tasks of property maintenance, freeing you up to focus on your other interests and responsibilities.
9.) Distance: If your investment property is located in a different city, or state...or even across town, a property manager can handle any issues that come up, and be there without you having to make a long trip.
10.) Vendor Relationships: A property manager has relationships with the best vendors in town. You need to work with maintenance workers, landscapers, supplies and contractors, and you can leverage the property manager's experience to save time and money.
I hope that this gives you the breakdown of property manager benefits that you were looking for. If we can answer any more questions for you, please give a call at 803.802.0004.
Property Manager
www.kuester.com
I recently bought an investment property--the building my office was in (I am a CPA) and I have been renting out the units. This has become too difficult a task for me to do on my own, but I am not sure if the next step is hiring someone part-time (I don't think it is a full-time job...) or find a property management company.
Can you help give me some information on the benefits of hiring a property management company?
Steve N.
Dear Steve,
This is a great time to invest in property, but as you have learned, managing and maintaining that property can be quite an undertaking. We have compiled the Top 10 Reasons to Hire a Property Manager to explain some of the benefits for you.
Top 10 Reasons To Hire A Property Manager
1.) Money: Collecting money from tenants and making deposits can be a huge headache. Not to mention make you unpopular, or put you in an awkward position (especially since you have an office on the same property!) A property management company will have a proven and tested system in place to collect rent and maintain on-time payments.
2.) Legal: There is a many laws and regulations that you are going to need to abide by when renting and maintaining your rental property. There are local, state and federal regulations, and a property manager can help you avoid legal problems later by keeping your property current and in compliance with these regulations.
3) Rental Rates: A property manager can insure that your rental rates are competitive--they know the market and how your property stacks up, so that you can keep your investment full and bringing in cash flow.
4.) Marketing: A property manager will bring experience in offline and online marketing, as well as local direct mail, and other advertising opportunities. This will increase the exposure of your properties, and work to keep them filled.
5.) Inspections: A property manager will coordinate routine inspections before a tenant moves in and after a tenant moves out, which can find problems before they grow into huge expenses, and make sure they are repaired in a timely manner.
6.) Finding Tenants: Securing tenants can be a time consuming process. Depending on the extensiveness of requirements for your rental properties, a property manager can take care of securing all criminal background and security checks, credit reports, employment verification, and previous landlord references. In addition all tenant disputes, conflict resolution and emergency maintenance will all go through a property manager, who will involve you at his or her discretion. In addition,
7.) ROI: Most property managers charge a percentage of the monthly rental rate which can range anywhere from 6-10%, however, given the professional expertise and services provided coupled with time saved, gives you a positive return on investment.
8.) Time: A property manager handles the routine daily tasks of property maintenance, freeing you up to focus on your other interests and responsibilities.
9.) Distance: If your investment property is located in a different city, or state...or even across town, a property manager can handle any issues that come up, and be there without you having to make a long trip.
10.) Vendor Relationships: A property manager has relationships with the best vendors in town. You need to work with maintenance workers, landscapers, supplies and contractors, and you can leverage the property manager's experience to save time and money.
I hope that this gives you the breakdown of property manager benefits that you were looking for. If we can answer any more questions for you, please give a call at 803.802.0004.
Property Manager
www.kuester.com
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