Commercial Lease Agreement

[Jacob Straley]

A forum Search only revealed a few threads that didn’t answer my question. I know there are many commercial investors in the BP community. I have a really exciting new mixed use property under contract in Michigan that is vacant at this time in a great location. It has two first floor commercial spaces that we will renovate with an open second floor that we will be putting in apartments. Both my business partner and I have several residential rentals but we have limited experience with commercial leasing. We do not plan to have a triple net lease for the commercial tenants but will have all utilities separated. My main question is about leases. Does anyone have any sample commercial leases or recommendations of sources for commercial leases? Also, are there any pitfalls with commercial that we should be aware of? Any advice or guidance from those more experienced is welcome!

[John McKee]

The first floor condo's should pay taxes, your liability insurance, and all expenses including the HVAC.  The roof is a bit tricky since it covers multiple tenants so factor that into your cost or in the lease state that the tenant will pay their prorated share of a special assessment for the roof  when needed.  Also make sure that the tenants cover any glass damage as that is not considered structure in nature.  The idea in commercial is to have the tenant pay all the expenses.  It may seem like a pain, but you have to get the lease right so that IF you decided to sell it an investor can calculate their true rate of return.  At the very least your property can be a NN which means you will have to cover the structure which includes the roof.