Are you a landlord? It’s a good position to be in, whether you’re a commercial landlord or a residential one. You can build equity in real estate and generate cash flow. Who doesn’t like that?
As a landlord, you’ve probably learned a few lessons, and maybe you’ve even learned some of those lessons the hard way. Let me know if you’re familiar with these:Continue Reading Best Practices for Landlords
With property values consistently trending upward, many Florida business owners are deciding whether to purchase or lease commercial real property. Below are a few considerations to keep in mind before making your decision.
While there has been a stream of positive news about the general health of the economy, the Federal Reserve has kept interest rates considerably low. Therefore, it is an attractive interest rate environment for commercial borrowers who are financing real property. Depending on the term of the loan and type of property, current rates range from 3.50% to 6.50%, while prime rate (a barometer for different types of interest rates and the rate which financial institutions lend to their most prominent and creditworthy customers) remains at 3.25%. To put this into perspective, prime rate was 8.25% in 2007. Lower interest rates obviously lower the monthly payment obligation, and can accommodate a move to a higher tier property.
Judged against lease terms, the comparison changes depending on whether the owner is leasing for use as retail or office space. The former is generally based on a percentage of gross sales generated at the site, the latter normally contains an “escalation clause” that annually increases the rent obligation by 2-3%. Additionally, a commercial tenant (particularly a retail tenant) is likely liable for the real property taxes, utilities, and other expenses, which negates some of the perceived advantage that leasing may have over ownership.
Thus, a lease payment may initially have a lower payment burden but over time could exceed the payment obligation of a loan.
As a real estate lawyer, a significant part of my practice involves preparing and negotiating commercial and residential lease agreements. At times, however, potential clients may decide to find a sample lease agreement online, or have their realtor prepare the lease, to avoid attorney fees.
Proceed With Caution
Because most commercial leases are for 5,
Most real estate savvy folks are familiar with the phrase “caveat emptor” or “buyer beware,” as applied to real estate transactions. Buyers are routinely advised to scrutinize their purchases through property inspections, review of zoning, permitting and code compliance of the property in addition to obtaining title insurance. However, when leasing property, tenants typically focus
Looking back at 2012, there are two memorable phrases that I frequently heard from clients: “I just need a simple lease” and “you are the best real estate lawyer ever to have lived.” This article will focus on the former statement for various reasons, one of which may or may not involve honesty.
“I just
Commercial leases often contain the option of additional or “renewal” terms to extend the lease term. Reviewing and understanding this provision in your lease can help maximize your lease rights, whether you are the landlord or the tenant. This post focuses on the importance of a well-drafted renewal option provision, and the need to monitor critical deadlines.
Mechanics of Renewal Options
Understanding the mechanics of renewal options is important. Some parties prefer automatic renewals, while others favor the delivery of notice to exercise renewals. There can be one or more renewal options. Several factors can influence how to best structure the renewal option provision, such as current and anticipated market conditions, landlord concessions, tenant incentives, business planning, and your administrative ability to monitor deadlines, to name a few. Continue Reading Understanding Commercial Lease Renewal Options