It is, therefore, highly recommended to get professional help. The firms that specialise in commercial leasing have account managers, who have a deep understanding of the entire process and related documentation to help property owners sign a lease agreement without trouble.
Let us look at the aspects where a professional account manager can make a difference with his expert level knowledge.
1. Leasing term - The leasing term is one of the most crucial aspects of the leasing contract that a property owner needs to understand before closing a commercial lease. It defines the duration in months for which you are planning to lease out your commercial property.
Commercial property lease is a continuous agreement and it will come in a few different forms based on your lease contract. In most of the situations, you will get a fixed duration lease in which you will have to renew the lease contract every year for a specific duration. Usually, the lease value that one can calculate is based on the lease term. This calculation involves details which are not always well understood by the owner.
ImpactR ensures attaching a well-trained account manager who helps a commercial property owner to understand the importance of lease term and works out the most profitable option depending upon the market conditions.
2. Advance security amount and monthly lease rentals - A commercial property could be used as a cash generating machine. However, the property owner needs to get the appropriate clauses included to ensure it works out profitable for him. In most of the commercial premises, the operating costs are quite high. These operating costs could include maintenance charges, property tax and collective advertising costs. It is important to take care of these when negotiating monthly lease rentals, else this could affect the profitability adversely.
In commercial leasing, there is a large sum involved as advance security to cover various risks of the property owner. It could be anywhere between 15 and 50 percent of total rent. It ensures sufficient coverage if the tenant breaks the Rental early or irreparably damages the property and also to demonstrate the tenant's good faith & efforts in using the property for the intended purpose only.
It is only possible by a person well versed with these requirements to properly calculate advance and monthly rentals and services of a focused account manager ensures your profitability objectives from your commercial property are met.
3. Property and Occupancy details - Every commercial property is bound by certain rules defining the specific uses it is allowed for. For example an office space can’t be used as a shop in a lot of places. Also, there could be distinct requirements that were detailed out in the agreement when the owner had bought the property. The lease agreement should carry the details in which it could be clearly described what is and is not allowed in the rented space.
The lease agreement should also carry special clauses about the use of common areas for certain activities. Based on the nature of commercial premises, a tenant carrying out a prohibited activity in a designated area could spell a problem for the property owner. This could result in a large dent in the profitability assumptions worked out by the owner.
ImpactR has put systems in place to ensure that your account manager takes care of all these important details while finalising the clauses of the agreement. They are also imparted knowledge to keep the property owners’ interests in mind while handling any special instance.
4. Referencing - The lease-term for commercial properties are generally longer compared to housing properties. Also, there are many obligations falling on the owner in case a tenant doesn’t behave as expected. It is, therefore, extremely important to check the background of a tenant in case of a commercial lease. A property owner expects a commercial lease to provide peace of mind, by receiving timely rental payments. Similarly, one doesn’t want the property to go under litigation and stop cash flows. Also, a tenant could have a history of creating trouble with maintenance agencies, which again creates problems for the property owner.
A property owner will not have access to the network with details of past behaviour of tenants. It is also not possible to get the right feedback even if one reaches out to past landlords of a tenant. Sometimes, getting these particulars could help one from a future trouble with a tenant and a dedicated account manager can put in the necessary work to get a detailed profile with necessary references for the property owner to decide if a specific tenant is good.
The account manager allocated to a property owner at ImpactR has a wide network of fellow account managers to check background details of a probable tenant. A technology based system makes the search and referencing easy and error-free to provide you the necessary comfort before leasing out your commercial property.
5. Special situation clauses - The long duration of commercial lease can present its own set of challenges as there could be future events which are not possible to be forecasted. For example, if at some point of time in future, you want to sell your property to meet some sudden cash flow requirement, how will the lease be treated, or what happens if the tenant company declares bankruptcy. Also, there could be very specific future circumstances for a group leasing where multiple property owners lease their commercial properties to one tenant only.
A person who does commercial leasing regularly, would have encountered many such special situations and can guide the owner for inclusion of relevant clauses in the lease agreement for safety of investment. There could be many pitfalls creeping around in an agreement and a dedicated account manager with eye-for-detail would be a great asset in such situations.
ImpactR has account managers with enough renting experience to help the property owner navigate these roadblocks for a profitable leasing experience. Their integrity and customer orientation ensures that future situations are well spelled out in the agreement to avoid lawsuits on a later date.
Commercial lease agreements are detailed documents which contain the financial and legal rights and responsibilities of the property owner and the tenant. A well-negotiated lease with proper documentation ensures a steady income with contentment to the involved parties. While commercial tenants are well represented by professional teams, owners depend on help from professional account managers to conclude these agreements.
A good account manager also helps bring the two sides to common understanding in case of disagreements. A dedicated person feels obliged to resolve any non-performance of lease issues even after the lease has been initiated. At ImpactR, enough care is taken to assign the right account manager to a client. They are also supported by an experienced team of finance and legal experts to make the entire experience satisfying and profitable.