Author Topic: Tips for leasing my commercial property  (Read 1862 times)

MaxRules

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Tips for leasing my commercial property
« on: March 03, 2014, 11:10:23 AM »
Lots of good info here for renting out residential housing. I'm kicking around a few ideas on whether to sell or lease my commercial property. I don't know a whole lot about leasing but the general consensus seems to be that it is much less work and responsibility for the landlord (me) than a residential home. I plan to leave the state so the property will not be under my immediate supervision, although I could have family come by and check on the lessee if needed. Here's some facts:
I think I would list the property at $139,900 if I were to sell it. It is a rural area but has other businesses around. It's a 2400 sq ft building on 7 acres with more than enough room to expand. Nice highway frontage.

I owe $45,000 on the property so I stand to walk away with some good cash. The option to lease it appeals to me. Is there any general rule on how much the lease would be? I compared it to the payments a person would make on the sale price, with 5% interest for 20 years, and that would be about $800/month. Would a lease for $875/month be accurate? That is about how much the annual property tax is. I could lease it for two years or ten years and probably sell it for as much or more than I could now. Seems like a good income stream with a sale at the end.
Any help or tips would be greatly appreciated!

honobob

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Re: Tips for leasing my commercial property
« Reply #1 on: March 03, 2014, 01:33:28 PM »
Talk to a Broker before you become broker. 
Also research what NNN is before you talk to a Broker.
Oh. and market lease rate.
« Last Edit: March 03, 2014, 01:36:46 PM by honobob »

Another Reader

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Re: Tips for leasing my commercial property
« Reply #2 on: March 03, 2014, 02:05:12 PM »
Talk to both a leasing agent and a sales agent that specialize in this type of property.  The place may be leased IG or NNN, depending on the practice in your area.  I don't think there are many places like this where you would pay the utilities.  IG = industrial gross - you pay the property taxes and insurance.  NNN = triple net, the tenant reimburses you for property tax and insurance as part of the rent payment.

What you can rent the property for depends on the market.  It could be more or less than a typical mortgage payment.  If there is a lot of demand, the rent will be higher.  If there is little demand, you may have difficulty in finding any tenant.  You also need to know about the creditworthiness of potential tenants.  The agent should help you with that.

If the users of this type of space are typically owner-users, then that may be the market for your property and you will be better off selling.

Hope this helps.

honobob

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Re: Tips for leasing my commercial property
« Reply #3 on: March 03, 2014, 02:55:44 PM »
Talk to both a leasing agent and a sales agent that specialize in this type of property.  The place may be leased IG or NNN, depending on the practice in your area.  I don't think there are many places like this where you would pay the utilities.  IG = industrial gross - you pay the property taxes and insurance.  NNN = triple net, the tenant reimburses you for property tax and insurance as part of the rent payment.

 

Hope this helps.
Another Reader, these are pretty incomplete definitions of the type of leases don't you think?  Plus even this can vary some by region.  As MaxRules seems to have no basic knowledge I think it best for him/her to get COMPLETE information now instead of drips and pieces in multiple posts here (correct or incorrect).

honobob

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Re: Tips for leasing my commercial property
« Reply #4 on: March 03, 2014, 08:46:47 PM »
Here's a starting point.  http://en.wikipedia.org/wiki/NNN_Lease