Steven Taylor, Taylor Equities - Things to Consider When Renting Commercial Properties

According to Steven Taylor of Taylor Equities, if you are thinking about renting a commercial property, there are many things to consider before you sign a lease. The commercial real estate landscape comes with many complications and isn’t as straightforward as renting a residential space. To find the right property, you will need to understand the factors that will affect your lease term.

 Here are a few things to consider when renting commercial properties:

1. Choose the right location

Before deciding to rent a commercial property, it is important to research the neighborhood and understand the market. Is this location a prime area for your business? Pay close attention to street traffic, noise levels, economy changes, and customer behavior in nearby businesses. Does the area have ample parking? Will employees and customers feel safe and secure? Is the building accessible to your manufacturers and suppliers? Taking the time to ask the right questions can save you time and energy in the long run.

2. Agree on rent and tenure

Once you have chosen a property, you will need to agree on rent and tenure. Many renters don’t realize that a lease is negotiable. Don’t be shy when researching properties - to ensure you get the best deal you will need to discuss and negotiate the lease terms with the landlord.

Locking in a deal that will decrease monthly expenses can be a game-changer. If a property you are interested in is out of your predetermined budget, first see if the landlord will budge on the rental price. If not, look elsewhere. In most cases, it won’t be worth splurging and taking the risk. The same rule applies to tenure. If you are looking for a short-term lease with renewal options, but a building is requiring a long-term lease, it is essential to consider how your business will be affected.

3. Understand the type of lease you are entering

There are a few different types of commercial leases. Make sure you understand what type of property you are renting and how the payments will be executed.

Percentage Lease: 

This is the type of lease used most commonly for retail spaces. With a percentage lease, the tenant pays the landlord a base rent as well as a sales percentage. 

Net Lease: 

In a net lease, the tenant must pay the landlord expenses incurred while renting the property, such as maintenance expenses, in addition to their rent.

Gross Lease: 

In a gross lease, all fees are included in the per square feet price.

4. Further examine the agreement

Many people sign a lease without thoroughly reading the fine print. Steven Taylor of Taylor Equities believes, this can be a grave mistake. Spend an ample amount of time reading through your lease agreement. If there is anything you don’t understand, consult a real estate professional or lawyer. Otherwise you may end up signing an agreement that greatly favors the landlord. Often, renters don’t realize that their lease is negotiable. Look through the agreement and discuss each clause. A lease agreement should clarify all of the tenant’s rights and obligations.

Do your research, negotiate a deal, and always have an exit plan. The process of renting a commercial property can feel overwhelming, but if you take the time to consider the factors that will affect your business, you could save yourself from a bad business deal and improve your chances of long-term success.

A Guide to Landlord-Tenant Responsibilities - Steven Taylor

A Guide to Landlord-Tenant Responsibilities

Many investors decide to become landlords without considering the extensive responsibilities involved. Some even assume those responsibilities will fall on the tenant. Depending on the laws in your area, you will likely be responsible for keeping your building up to standards that will keep your tenants safe and clean. You will have to respond to requests for maintenance in a length of time that is considered reasonable. 

Tenants also have certain responsibilities, which can be determined by the lease contract and also by law.

When deciding to become a landlord, you should first consult an attorney to determine the laws and requirements that affect you and your local area. As a building manager, it will benefit you to discuss how responsibilities are divided with tenants upon move in. This will ensure that expectations are clear.

Note: This article is for educational purposes only. I do not make any guarantees that the responsibilities in this article are compliant with current or local laws. Always consult an attorney in your area.

Responsibilities of the Landlord

In general, a landlord is responsible for keeping their building clean, functioning, and safe. Many areas have codes and laws that specify standards for building construction, standard of living, and maintenance. You can find more specific regulations for your state here.

Ensure habitable conditions

 

As a landlord, you are expected to check maintenance regularly and repair your property upon demand. In some local areas, there are further requirements including:

●     Upkeep of common areas

●     Providing receptacle for trash disposal

●     Correcting any infestations of vermin or bugs. 

●     Keeping the property’s structure safe and intact

●     All electrical, sanitary, ventilation, plumbing, and other required equipment in order

●     Disclosing all history of environmental hazards to tenants

Enforce a quiet environment

Part of your job as a landlord is ensuring that your residents don’t disrupt others. Many include a clause in their lease that requires tenants to maintain a noise level that is reasonable for evening hours with consequences for disturbing other residents.

Provide tenant safety

As a landlord, your responsibility to provide tenants with safety standards can be a legal requirement (depending on the local law). There are many ways you can help ensure your tenant’s safety. Here are a few:

●     Screen all prospective tenants. Use an application and background check to screen tenants before move-in. You can also ask for references.

●     Always give notice of entry. You must keep units up to standards, but when performing maintenance, you must follow local laws in regards to notice that must be given before entering a unit. Most states have a standard of 24 or 48 hours notice before entering a rental, but requirements can vary in an emergency.

●     Maintain building locks. It is important to re-key locks for new tenants, and keep locks on building doors and windows up to date.

●     Provide safety equipment. Your building must have functioning smoke and carbon monoxide detectors that are in proper condition.

Please review the landlord responsibility standards for your state and local area for further requirements.

Responsibilities of the Tenant

The tenant is usually responsible for ensuring that their unit stays in good condition. They are also expected to report any issues or damages to the landlord. Here are a few responsibilities that often are required of the tenant:

Maintain unit cleanliness

Typically, tenants are responsible for keeping their rental unit clean and sanitary, including:

●     Discarding trash

●     Preventing the growth of mold

●     Preventing excessive buildup of dirt, rust, scum, and grime on surfaces

●     Maintaining appliances

Avoid excessive damages

Tenants should avoid causing damage to their unit. While a certain level of wear and tear is expected, the property should be maintained at the condition level at the time of move-in. Some local laws enforce tenant liability in cases such as:

●     Removal of fixtures

●     Violation of occupancy rules

●     Blocking emergency exits

●     Damage caused by fire

●     Tampering of smoke or carbon monoxide detectors

●     Using premises for unlawful purposes

●     Damage from pet violations

Report issues in a timely fashion

Tenants are required to let their building manager know about any required maintenance as soon as possible. If there is an issue that the tenant fails to report to the landlord, they may be liable for further damage.

Landlords should conduct a walk-through with tenants before move-in to acknowledge any issues or necessary repairs, and document current conditions. It is the responsibility of the tenant to maintain a copy of their checklist in order to avoid any liability at the end of their lease term. Many damage charges that fall outside the scope of wear and tear can often be covered by a security deposit. 

Consult laws for your local area for further tenant responsibilities.  - Steven Taylor, Landlord in LA

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