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Common Things Entrepreneurs Should Know Before Signing A Commercial Property Lease

Signing a commercial lease entails an entrepreneur to specific rights, responsibilities, and duties pertaining to the property. So, before signing and binding yourself to the same, you should be aware of everything stated in the lease.

Some of the major elements to consider before signing a commercial property lease are:

  • Research: Before signing a lease, conduct some research into factors such as current tenant dynamics, operation hours of other tenants and your business, the status of current vacancies, traffic patterns in the area, zoning laws, nuisance laws, availability of sufficient parking, etc.
  • Rent Structure: Review the rent structure to know how much you have to pay on a monthly basis, the rate by which the rent is expected to increase every year, etc. This information will be useful for determining your budget and figuring out whether the deal will be financially viable for you in the long-term.
  • Lease Terms: Weigh the pros and cons of a long-term lease versus a short-term one based on factors such as the amount of flexibility you require (to move locations), the area (whether it is an emerging area or a well-established one), etc.
  • Monthly Costs: Assess the amount of money you will have to spend every month before signing the rental agreement. Ask the property owner about the payment structure and terms of property taxes, insurance, interior/exterior maintenance, repairs, utilities, etc.
  • Statutes: Be aware of applicable statutes (depending on the state you are in) before signing a lease. You should know about the transfer structure: subletting and assignment of lease in case you plan to close down your business in future, personal guarantees (if your business defaults), holdover rent and non-disturbance agreement (to stay in the commercial building even if the property owner changes for any reason).
  • Common Rules: This refers to Covenants, Conditions and Restrictions (CC&Rs) set by the property owner for tenants. Before signing a lease, ask whether the commercial center has CC&Rs. If yes, then read them thoroughly and look out for rules about operation hours, noise levels, sign restrictions, etc.
  • Responsiveness: Judge whether the property owner is responsive to the needs of tenants, how after-hour emergencies are handled and other factors. For a clearer perspective on this, ask existing tenants about their experience.
  • Property Inspection: Ask for an inspection of the property before signing the lease agreement. Note down verbal agreements arrived at during the walk-through, click photos of existing damage if any, etc.

Contact the agents at John Reider Properties to understand things to consider while signing a commercial property lease. The agents assist the customers in choosing an ideal commercial property on rent. For more details on common things entrepreneurs should know before signing a commercial property lease, visit us at 455 E. Central Texas Expwy Suite 101, Harker Heights, TX – 76548. You can also call at (254) 699 – 8300.

Common Rules of Commercial Real Estate Investing

Commercial real estate investments such as office buildings, retail space, industrial sheds and warehouses are considered as a reliable source of regular income for many investors. Those who invest in commercial property benefit from its strong earning potential, long lease periods, price stability and other features. The process of investing in commercial real estate can be simplified by following certain rules that help in determining if it is a lucrative deal.

A comprehensive list of common rules for investing in commercial real estate are:

  • Location: The rent and appreciation of commercial real estate is dependent on its location. When investing in commercial real estate, ensure that the location is one that will attract more tenants and reduce vacancies.
  • Quality Tenants: Invest in a commercial property that is likely to attract quality tenants. The benefit of such tenants will be that they will be particular about paying their rent on time and stay for longer durations.
  • Capitalization Rate: The ratio between the Net Operating Income and value of property is referred to as Capitalization Rate. This rate is used to determine the value of property as per the current rate of return in the market. A minimum of 8 to 10 percent cap rate is recommended for property to be able to generate sufficient income for covering risks and expenses.
  • 50 Percent Rule For Expenses: As per this rule, the non-mortgage expenses (maintenance, vacancies and other charges) of commercial real estate should not exceed 50 percent. This rule helps in estimating cash flow every month and managing expenses accordingly.
  • Debt Coverage Ratio: Calculate the property’s DCR (Debt Coverage Ratio) i.e. the ratio of the Net Operating Income to that of the Annual Debt Service. Net Operating Income refers to the property’s potential income after deducting operating expenses, credit loss and loss due to vacancy. The Net Operating Income should be around 20 percent more than the debt service.
  • The 1 Percent Rule: This rule helps in estimating the worth of property being pursued. As per this rule, commercial property should generate a minimum rent equivalent to 1 percent of its purchase price as rental income.
  • Mix Units: Investing in diverse commercial properties builds your real estate value and generates consistent income for years.

John Reider Properties offers a variety of commercial real estate properties to its clients. Our team assists the clients in finding an ideal commercial property. We have years of knowledge and experience in commercial real estate market. To know about rules of commercial real estate investments, visit us at 455 E. Central Texas Expwy Suite 101, Harker Heights, TX – 76548. You can also call at: (254) 699 – 8300.

Choosing A Commercial Property Management Agency

Maintaining your commercial property is necessary to keep its value intact. This makes it important to choose an efficient property management agency. The right firm is one that provides better returns on your investment, helps in retaining tenants and increases the value of your property.

As per your personal investment objectives, following points should be considered when choosing a property management company:

  • Reputation: Research about the reputation, integrity and honesty of the agency you intend to hire for commercial property management. Consider how the agency manages its work and the level of commitment projected by its team of professionals.
  • Services: Check whether the services provided by the agency meet your expectations and fulfill your specific needs. Common services provided by a property management agency are management planning, financial reporting, budgeting, market rent analysis, rent collection, maintenance programs, etc.
  • Knowledge and Experience: Determine the number of years for which the agency has been working in the field of commercial property management. Ask for information on its background, resume, history, etc. See whether they understand your needs, tenant screening process they follow, whether they manage multiple properties, etc.
  • Management Software: A good property management agency is particular about using the right software. To get an idea about this aspect, see how the company integrates tenant information, maintenance requests and accounting.
  • Accessibility And Responsiveness: An ideal property management agency is one that is highly responsive and accessible when needed by a client. You can gauge this by the way you are assisted with your queries. The team should communicate in a respectful, enthusiastic and patient manner when discussing their policies and procedures.
  • Tenant Retention: A tenant retention plan can be a determining factor of a commercial property’s survival. Check with the property management agency about the efforts that they make to retain tenants during lease term and after the lease expires.

John Reider Properties is a renowned commercial property management agency. The team offers a variety of management services including on-site consultation, property inspection & maintenance, etc. For more details on choosing a commercial property management agency, visit 455 E. Central Texas Expwy Suite 101, Harker Heights, TX – 76548. You can call us at: (254) 699 – 8300.

Essential Tips For Selling Your Commercial Property

There can be numerous reasons for selling commercial property including change of location, cashing out the commercial investment, retiring from an old business and other factors. When selling a commercial property, the most important considerations are the time it takes to sell and the price one fetches.

Following are some tips for selling a commercial property efficiently and at a fair price:

  • Preparation: The first step towards preparing to sell a commercial property is to gather the necessary documents required by your real estate agent or the buyer. Important documents that may be required are title deed copy, permits for alterations on the commercial site, previous lease copies, stamp duty, land tax, utility bills and more.
  • Choose The Right Agent: Hire a professional to assist you with selling the property. Real estate agents have years of experience in the field and can be of immense value in managing the sales process. Look for an agent who has knowledge about the latest marketing technology, a strong presence in the community, good negotiation skills and so on.
  • Boost Curb Appeal: Pay attention to how your property looks from outside to make it appealing for onlookers and potential clients. Some things you can do to improve your property’s curb appeal are landscaping, power washing, painting, fixing the parking lot, fixing broken light fixtures, windows, etc.
  • Spruce Up The Interiors: Potential clients will visit your property to see its interior condition. Use this as an opportunity to impress them by keeping the interiors clean and well-maintained. Make it a point to clean the floors and carpets, ensure proper ventilation, de-clutter, etc.
  • Hire A Staging Professional: Impress potential clients by making the commercial space look great. For this you may have to hire a professional real estate company to stage the property with impressive furniture, items of decor, indoor plants and so on.
  • Right Pricing: Formulate a pricing strategy based on the value of comparable properties. Enquire about similar properties that were recently sold. Pay attention to the location, amenities and selling price of such properties, etc. Assistance from a professional can be invaluable for doing price research in a locality.
  • Marketing: The way in which any property is marketed plays a huge role in successfully selling it. First and foremost, the property should be clearly branded as “Property For Sale”. Thereafter, it should be thoroughly advertized. You may seek assistance from a professional real estate agent for ensuring proper marketing strategy.

John Reider Properties assist clients in selling commercial properties. The agents are well-versed and carry out extensive marketing for the effective sales of commercial properties. To know more about essential tips for selling a commercial property, visit 455 E. Central Texas Expwy Suite 101, Harker Heights, TX – 76548. You can also call at: (254) 699 – 8300.

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