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Updated almost 7 years ago,
Push For More Cash Flow or Get a Great Tenant in Place?
I have a potential tenant interested in leasing a commercial spot that I am currently under contract on. I have met them and can tell based off there lease history and our conversation it would be a great tenant and most likely long term. They would be operating their well established Heating and Air business out of the dwelling I have available and would be adding gravel to the parking level and fixing up the inside slightly on their dime in this deal.
They have offered me $200 below what my initial asking lease price was based off the other comparable places they have found being priced a little lower and includes an outbuilding/warehouse for storage. If I take there deal I will only be cash flowing around $100 a month but my expenses would be covered and I believe I would have a great low maintenance tenant for the long term.
I am seeking some advice from experienced investors on weather they would take this deal and let the tenant pay down the debt and sit and let the property appreciate, I did not mention that this property sits on a major highway and at an intersection of a steadily growing area. Or, do I push for an extra few hundred in cash flow a month and risk losing out on a long-term tenant? If this happens I will likely be putting in roughly 2K - 5K worth of updates to the property to make it more attractive to tenants and possibly waiting a month or so for another good tenant to come along and hope they pay what I would initially want to price it at.
as i am writing this I am leaning more towards taking their offer. A good tenant can make all the difference and if they are willing to make a few updates to the property on their dollar and my expenses are covered then that cant be bad deal, right? I also have the opportunity to raise rents over time.
I look forward to your thoughts! thanks.