What should I look for when reviewing a commercial lease?
What should I look for when reviewing a commercial lease?
TIP #2. THE PREMISES
- Description of the Premises.
- Preparation of the Premises – Tenant’s Work and Landlord’s Work.
- Minimum Rent.
- Net Lease.
- Gross Lease.
- Percentage Rent.
- Increases in Minimum Rent.
How do you evaluate a commercial lease?
The most basic equation for calculating a lease payment takes the number of square feet times the cost per square foot, then amortizes that over a 12-month span. For example, if you have 1,000 square feet and the cost per square foot is $12, the annual lease amount would be $12,000.
What will leverage allow an investor to do?
Leverage uses borrowed capital or debt to increase the potential return of an investment. In real estate, the most common way to leverage your investment is with your own money or through a mortgage. Leverage works to your advantage when real estate values rise, but it can also lead to losses if values decline.
How do you determine if a commercial property is a good investment?
It’s important to look at the following factors when thinking about investing in a commercial property with a triple net lease opportunity.
- Look at the rent prices, as well as common lease terms, for similar buildings in the area.
- Look at what a similar tenant is paying in rent (for a similar type of space in the area).
How to review a commercial real estate lease?
Watch out for provisions that give the landlord the right to recapture the premises or terminate the lease in the event you seek to assign or sublease the space. On the flipside to exit strategy considerations, consider the possible need to expand your premises in the future.
How does a commercial lease work in Texas?
A commercial lease is a legally enforceable agreement that sets forth contractual obligations between a lessor (“landlord”) and a lessee (“tenant”). • The relationship and statutory duties between landlord and tenant of commercial rental property are codified in Title 8, Chapter 93 of the Texas Property Code. If there
How long does a commercial lease usually last?
Most commercial leases are effective for a term of years. However, some commercial leases may run month to month, depending on availability or the seasonal needs of a prospective tenant. Be aware of the critical State of Frauds exception for oral leases of real estate with a term of one year or less.
What do you need to know about leasing a property?
As a tenant, you want to be assured that the landlord has the right to lease the premises to you and otherwise perform under the lease. Accordingly, it is important to verify that the landlord is, in fact, the record owner of the property.
Watch out for provisions that give the landlord the right to recapture the premises or terminate the lease in the event you seek to assign or sublease the space. On the flipside to exit strategy considerations, consider the possible need to expand your premises in the future.
Most commercial leases are effective for a term of years. However, some commercial leases may run month to month, depending on availability or the seasonal needs of a prospective tenant. Be aware of the critical State of Frauds exception for oral leases of real estate with a term of one year or less.
Is there a critical state of frauds exception for commercial leases?
However, some commercial leases may run month to month, depending on availability or the seasonal needs of a prospective tenant. Be aware of the critical State of Frauds exception for oral leases of real estate with a term of one year or less. See Business and Commerce Code Section 26.01(b)(5) and (6).
What are the clauses in a commercial lease?
There are a myriad of clauses in a commercial lease. While it is important that you have your lawyer review your lease, you should not be totally green to commercial leases. Here are a few important clauses to keep in mind. Subleasing is where a tenant leases unused space in their lease agreement to another tenant.