Buying a small commercial property, what happens to the leases?

Buying a small commercial property, what happens to the leases?

Philadelphia, PA · Member since 2016 · 8 posts · 0 votes

I am interested in buying a small 6 unit commercial property. All the units are very small and they are always leased. Do I have to inherit the leases and abide by their terms? Some go into 10 years.

I don't think the rent is reasonable, it's on the low end and I would be interested in increasing it by 3% at the most for the year that I assume the ownership. One of the tenants is locked in for 7 years without any rent increase.  Not sure how the agreement could have been signed like this.

Thanks.

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  • Property Manager · Castro Valley, CA · Member since 2016 · 212 posts · 110 votes
    9y

    Yes, you inherit leases and terms when you buy a building.

  • Philadelphia, PA · Member since 2016 · 8 posts · 0 votes
    9y

    I stand corrected, some of them are locked in for another 3 at the most.  When they were locked in, the paperwork stated 5 years.

    Why would anyone do that? And how much leverage do I have in negotiating?

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