flexibility in commericial lease

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I'm considering leasing a retail space in a strip mall . It would be a small business that doesn't have any special permanent fixtures like kitchen or bar, just a lot of equipment. How are commericial leases typically structured for small businesses that aren't franchises of established national chains? I would like the flexibility of not being locked into a long (more than 2 years ) lease but also try to avoid getting forced out and having to move my business.

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That's called a Ground door in a commercial zone.
But good catch.

forbin4040 (Jun. 24, 2017 @ 9:39a) |

I have seen a few docs around here that operate out of their home and have converted the garage into an office/waiting r... (more)

atikovi (Jun. 24, 2017 @ 9:47a) |

The best doctors operate out of unmarked doorways off of narrow alleyways.

jerosen (Jun. 24, 2017 @ 9:50a) |

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2 years? That's short for commercial.

Just negotiate a long term lease (10-20 years) with a buyout option for you.

scrouds said:   2 years? That's short for commercial.

Just negotiate a long term lease (10-20 years) with a buyout option for you.

What's a reasonable buy out amt

Depends on the site.

You want to open a gym?

rufflesinc said:   scrouds said:   2 years? That's short for commercial.

Just negotiate a long term lease (10-20 years) with a buyout option for you.

What's a reasonable buy out amt

Tree fiddy

stanolshefski said:   You want to open a gym?
  Yes, something like that. as I own rentals, I normally would just buy a building, but in the areas I want to open it, there's really no free standing commericial buildings for sale, just lots and lots of strip malls. 

rufflesinc said:   I'm considering leasing a retail space in a strip mall . It would be a small business that doesn't have any special permanent fixtures like kitchen or bar, just a lot of equipment. How are commericial leases typically structured for small businesses that aren't franchises of established national chains? I would like the flexibility of not being locked into a long (more than 2 years ) lease but also try to avoid getting forced out and having to move my business.
  I assume by "flexibility" you mean you dont want the business to fail after a year and still be on the hook for another 100 monthly lease payments?

What you want is a 1 or 2 year lease with a 5 or 10 year renewal option.  Whether you'll find a landlord willing to accept those terms is another story, and even so it'll probably cost you.  The other possibility is a 10-year (or whatever is standard in your area) lease, with an opt-out window after two years, where you can void the remaining lease term for a pre-specified penalty.

For what would seem to be a pretty basic building, are there lots available where you could just build the required structure?    Or even a home with the right location, that can be modified to suit your purposes and can get a zoning variance?

Also, while there may not be any free-standing buildings listed for sale, you can always cold-call potential locations and see if there's any interest in selling.  You might waste a couple days chasing down owners to ask, but you never know who you might find is quietly thinking about closing or relocating anyways.

There are some "outlots" I guess but I don't know the ownership details if it's like a condo where I don't own the land

Glitch99 said:   
  I assume by "flexibility" you mean you dont want the business to fail after a year and still be on the hook for another 100 monthly lease payments?

  And what will happen if you break the lease after a year? If the business fails and you're broke, what could they collect? And if it's such a valuable property, they should easily be able to re-rent it so they might be out just a few months rent.

atikovi said:   
Glitch99 said:   
  I assume by "flexibility" you mean you dont want the business to fail after a year and still be on the hook for another 100 monthly lease payments?

  And what will happen if you break the lease after a year? If the business fails and you're broke, what could they collect? And if it's such a valuable property, they should easily be able to re-rent it so they might be out just a few months rent.

  Is that generally true if you do the whole LLC deal? Good question, I'll ask my RE attorney

rufflesinc said:   
atikovi said:   
Glitch99 said:   
  I assume by "flexibility" you mean you dont want the business to fail after a year and still be on the hook for another 100 monthly lease payments?

  And what will happen if you break the lease after a year? If the business fails and you're broke, what could they collect? And if it's such a valuable property, they should easily be able to re-rent it so they might be out just a few months rent.

  Is that generally true if you do the whole LLC deal? Good question, I'll ask my RE attorney

  You wont get a commercial lease for a brand new LLC without personally guaranteeing it.  You are a landlord, you know landlords arent stupid about giving tenants an easy out like that.

Glitch99 said:   
  You wont get a commercial lease for a brand new LLC without personally guaranteeing it.  You are a landlord, you know landlords arent stupid about giving tenants an easy out like that.

  I've had a small commercial rental for 6-7 years and haven't so much as done a credit check on a renter. As long as I get 1st month and security up front they can have it. If they break the lease there isn't much I can do anyway if they have no money.  Just put it back on the market again and move on.

Glitch99 said:   
rufflesinc said:   
atikovi said:   
Glitch99 said:   
  I assume by "flexibility" you mean you dont want the business to fail after a year and still be on the hook for another 100 monthly lease payments?

  And what will happen if you break the lease after a year? If the business fails and you're broke, what could they collect? And if it's such a valuable property, they should easily be able to re-rent it so they might be out just a few months rent.

  Is that generally true if you do the whole LLC deal? Good question, I'll ask my RE attorney

  You wont get a commercial lease for a brand new LLC without personally guaranteeing it.  You are a landlord, you know landlords arent stupid about giving tenants an easy out like that.

  well actually, my business model , as atikovi says, is based on assuming they will break the lease and I never plan on suing a tenant for breaking a lease. If they leave wiith rent paid up to that point, I keep their security deposit and call it a day.

rufflesinc said:   
Glitch99 said:   
rufflesinc said:   
atikovi said:   
Glitch99 said:   
  I assume by "flexibility" you mean you dont want the business to fail after a year and still be on the hook for another 100 monthly lease payments?

  And what will happen if you break the lease after a year? If the business fails and you're broke, what could they collect? And if it's such a valuable property, they should easily be able to re-rent it so they might be out just a few months rent.

  Is that generally true if you do the whole LLC deal? Good question, I'll ask my RE attorney

  You wont get a commercial lease for a brand new LLC without personally guaranteeing it.  You are a landlord, you know landlords arent stupid about giving tenants an easy out like that.

  well actually, my business model , as atikovi says, is based on assuming they will break the lease and I never plan on suing a tenant for breaking a lease. If they leave wiith rent paid up to that point, I keep their security deposit and call it a day.

  But you dont tell them that upfront.  You are positioned to be able to pursue them if you choose to.  And I'm guessing that if someone wanted to rent one of your houses in the name of an LLC so that they personally had no responsibility for it, you wouldnt go for the arrangement either.

atikovi said:   
Glitch99 said:   
  You wont get a commercial lease for a brand new LLC without personally guaranteeing it.  You are a landlord, you know landlords arent stupid about giving tenants an easy out like that.

  I've had a small commercial rental for 6-7 years and haven't so much as done a credit check on a renter. As long as I get 1st month and security up front they can have it. If they break the lease there isn't much I can do anyway if they have no money.  Just put it back on the market again and move on.

  I'm guessing your "small commercial rental" isnt a strip mall, either. 

And you keep assuming that someone breaking the lease means they have no money - the entire purpose of using an LLC is to protect your money in the event you decide to break the lease (or incur varous other potential liabilities).  Most landlords, especially corporate (ie, strip mall managing) landlords, arent going to let people walk away from the commitment that easily.  They may ultimately let you walk away, but they arent going to tell you upfront that you have that option.

Just one unit in a "strip mall" drawing $1K/mo and netting around $750 after prop tax and maint. fee. One tenant broke 3 year lease after 1 1/2 years when the husband got a chronic illness and couldn't afford the place. At least they were current. Another one left after owing $2K from paying short the last few months. Not worth going after them. Re-rented the place within a month or two. Just the cost of doing business.

How do you manage to own a unit in a strip mall

rufflesinc said:   How do you manage to own a unit in a strip mall
  Got it at a foreclosure auction. Not sure if strip mall is the correct term but close enough. 

atikovi said:   
rufflesinc said:   How do you manage to own a unit in a strip mall
  Got it at a foreclosure auction. Not sure if strip mall is the correct term but close enough. 

 Condo type building?  

atikovi said:   
rufflesinc said:   How do you manage to own a unit in a strip mall
  Got it at a foreclosure auction. Not sure if strip mall is the correct term but close enough. 

  Looks like the same building my Doctor's office is in.

Your doctor has a garage door into the office?

atikovi said:   Your doctor has a garage door into the office?
  That's called a Ground door in a commercial zone.
But good catch.
 

I have seen a few docs around here that operate out of their home and have converted the garage into an office/waiting room. So garage door might be appropriate.

The best doctors operate out of unmarked doorways off of narrow alleyways.



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