Renting out an old Payless Shoe Store at NNN

[Account Closed]

I'm a complete novice at commercial real estate but jumped in head first. I now own a property in Florida that was a payless shoe store in a very busy area. After I bought it I was contacted by a number of brokers looking to help me rent it. I negotiated with a couple of them and finally signed a triple net lease with a fast food franchisee. They are doing construction to the property now. I have a ton of questions 

1. The lease states that they carry insurance but it seems to me that they don't take possession of the property until the certificate of occupancy is in their hands. For that reason should I have insurance on the property in case of hurricane, fire, damage, etc. and furthermore should I carry insurance on the property after that as well. (There's no loan on the property.)

2. They don't begin paying on the lease until they have the certificate of occupancy but because they are doing the construction it is up to them to get it. Does that seem right or do I need to go through my lease again?

3. Based on the above questions how badly did I screw up this lease by agreeing to rent beginning with the Certificate of Occupancy.

4. And last, When talking to the engineers, contractors, tenants and brokers, how do I make it sound as though I know what I'm doing when I clearly do not? (This is slightly rhetorical. More looking for a 'What should I not say.)

I've read through a lot of these posts and they've helped me get to where I am now with the property so I appreciate all of you that have contributed and hope to add something to the forum, hopefully not as a 'What not to do.' 

[Eric Lefteroff]

Did you have a broker representing you when you signed the NNN lease? If so, how is their commission being paid? 50% upon lease signing and 50% upon C of O? If that, or something similar, then your broker should continue to work with you and be able to answer these questions.

1) You should always have property insurance on your property along with other types of insurance. I would recommend finding a reputable insurance agent and working with them to determine the best coverages for you.  You own the building and still need insurance protection.

2) It is completely normal to have rent start upon the issuance of a C of O in a retail space.

3) You didn't screw it up.  

4) When speaking with industry professionals I would encourage you to ask lots of questions and get referrals from people you trust.  You need to balance your fear of not being taken advantage of with the opportunity to learn.  Speak with several professionals in each discipline.  This should help you identify who is legit and who is inexperienced or shady.  For example, if several GCs say it is so much to build out something for a similar price then that's probably about right.  If one or two are substantially low or high compared to the majority then you could probably eliminate them from the running.  For conversations with tenants, get representation from a broker.  A broker worth their weight will spend adequate time helping to educate you.  If they don't have much time for you then go with someone else.

Hope this helps.  Good luck!