I am getting ready to make an offer on a commercial 5 plex that is 100% leased out with long term tenants (over 8 years). Since the seller decided to sell the property he has decided to not extend long term leases. All of the leases will be up in a few months. I have been told tenants want a longer term lease. It would be a long term buy/hold property for me that I would like to keep all tenants in place. Property is in California.
Right now the cash flow looks decent with existing rents. I was thinking of making an offer contingent upon the seller executing a new long term lease with existing tenants that included a 3% rent increase. This will ensure nobody is leaving and increase my cash flow a little.
Does anybody have experience with these types of contingencies? It feels like I should be the one giving the seller my preferred lease language. I am concerned that everybody will vacate the property the day after I close on it.
