Sign Kentucky Banking Lease Agreement Now

Industry sign banking kentucky lease agreement now

okay so now we're recording and now I'm going to share the the screen again so we can okay alright okay so today like I said I think I just wanted to briefly touch on the different types of commercial lease agreements break them down at a high level and then we'll just go ahead and ask if you have any questions about the topic into any of the lease agreements feel free at the end we'll we'll talk maybe a little bit more in depth about it and I'll be happy to send you guys the slideshow as well as I have a little booklet that I created that's just kind of a reference guide that you guys can utilize going forward if you guys ever want to invest in commercial real estate or if you ever come across a situation where you would need to know this information it's it's definitely useful information to have so before we get started I wanted to talk sure this quote mainly because it's it's always whenever you're in a commercial transaction a lot of times you look to benefit the most you can out of the transaction but sometimes it's hard sometimes you fail to realize that in a lot of these situations you are gonna be dealing with the other person on the other end in some way in the future so at the end of the day I think it's important to know that if the deal isn't good for the other party it isn't good for you so don't ever approach negotiation or situation to where you're looking to gouge the other person as much as you can because you may have more information they do or whatever else it's always good to strike you maintain a level of of decency as an and mutually beneficial relationship so I thought I'd share that before we started so to start off the the first lease type that we we're gonna review is related to a gross lease now what a gross lease is is that the tenant pays one flat rate and the owner is responsible for all of the types of operating and whatever these are most common in retail office industrial multifamily briefs in these scenarios because the owner is responsible for all other expenses generally the base rents are higher so you can imagine if you're a tenant you would pay let's just take it for example you pay $2,000 a month and that would cover your water your electricity or everything you just pay the $2,000 to the landlord and the Landlord takes care of everything else so that's what a gross lease agreement would move in in a commercial setting number two is the modified gross lease now these are slightly different in the gross lease being that the costs are shared by both the landlord and the tenant these are most common in retail office industrial and multi-family situations now the responsibilities of both the tenant and the landlord are negotiated this is where the negotiation portion comes in in a lot of situations what I've seen is let's say you're negotiating an office deal or an office lease you would as the lessee come in and say look we're willing to pay this base rent and then we're responsible for paying our own Internet water electricity and then you as the owner responsible for everything else now the same thing can be said if you're a landlord and you negotiate saying look I'm willing to accept this base rent of $2000 but I also want you to pay on top of your internet water whatever else I also want you to pay a portion of the the cleaning expenses and the trash expenses that are shared by all the people in the building so that that could be an example of a modified gross lease and in these situations the base rents tend to be lower slightly lower than the gross lease make sense ah good all right now this is one of the least types that gets kind of interesting so this is prevalent primarily in the retail space in particular restaurants and retail locations that have high volume sales so groceries and clothing stores that sort of stuff you see these type of lease agreements essentially what it is is you'd pay a flat base rent and then on top of that you would pay a percentage above a certain break point as defined within a lease agreement so I provided an example below so let's say for example that you have agreed to your base rent and then you define in your lease document you say we're gonna pay you five percent of gross sales above $750,000 is extra rent for the year so in a police agreement let's say that this individual as you can see at the bottom had a gross sales of nine hundred and fifty thousand dollars and their break point was seven hundred fifty thousand dollars for the year that means you would subtract nine hundred fifty thousand from this one hundred and fifty and multiply that by the five percent and that gives you the ten thousand dollars of additional monthly rent or a yearly rent that would be that would have to be paid by the tenant this can be beneficial for the landlord and the city especially if they are the ones were beautifying the center in order to drive traffic generally you can negotiate a percentage lease so you can share some of the upside with the tenant if they do achieve higher sales as a result of your efforts to beautify a center or beautify the area so that people want to be in that area and thus sales increases as a result make sense land lease this is not as common in the area there are definitely land leases out there but I would say these are definitely more prevalent on the east east coast and I've seen a decent amount on the west coast and Phoenix area and that sort of stuff essentially what it is is you are leasing the lot with the raw land and these are most prevalent in scenarios such as mobile home parks I for some reason you you rent land and there's a billboard on it there's farmland and then sometimes in prime real estate development where the land is very valuable sometimes the owner doesn't want to sell the land and they're just interested in leasing the land at the lower rate now because they are leasing the land generally speaking it just that base rents tend to be quite a bit lower than the other ppolice agreements however there is a catch which is something that needs to be taken in consideration if you in fact want to enter into one of these agreements is that if you release this piece of land and you were to build a building on it that building would then become a fixture of the land so in real estate law that means that that land I mean that building is now part of that piece of real estate so in in a situation where you would like to develop property on that piece of land you need to make sure that you get a long-term lease agreement in place a lot of times with large developers when they take a piece of land there's a great piece for piece of property and they lease the land and then they build some big building on top of it that's gonna cost them a ton of money they try to get a very long lease in place a lot of times it could be over a hundred years including the options that's something that you need to take into consideration prior to pulling the pulling the trigger on a land lease deal all right now these these agreements are generally the ones in the commercial real estate setting that landlords tend to prefer and this really is because you're able to pass along increasingly more expenses to the tenant which limits men of the property and also your expenses right you you get you get more to the bottom line if you're able to get into some of these lease agreements and these are what's known as net lease agreements these are most proud in the industrial sector retail and office so as as I mentioned and at least as the tenant is responsible for paying some or all of the operating expenses and there are three particularly net lease agreements these are single net double net and triple net yeah now in single net leases it's where the tenant is responsible for paying a portion or all of the property taxes so the single in in the single net refers to property taxes the first one is taken to consideration and along with that they're generally responsible for paying their own operating expenses such as water electric phone internet etc the landlord will then be responsible for the insurance and the maintenance of the building so that is a single net lease agreement number two is double net leases now the double n signifies first the property taxes and the second insurance and then also the operating expenses such as water or sewer electric will phone whatever else is generally the responsibility of the tenant and then the landlord really the main responsibility that they have is maintenance of the building and then mean instead the common areas as well so you can imagine if you have a shopping center the sidewalks the the parking lot whatever else they're probably responsible for cleaning it up making sure that that if the parking lot is cracked and there's potholes then they're responsible for filling it that's the landlord's responsibility and that would be in a double net lease now generally the most sought after type of lease agreements in these scenarios is a triple net lease now what a triple net lease is that it the land the tenant is not responsible for paying property taxes insurance and maintenance on the building so really the landlord's responsibilities are limited to very little and you see this a lot in the investor circle in particular with larger properties which we'll talk about which is related to the absolute triple net but landlords really in a triple net agreement are still responsible for the structure in the roof so a true triple net lease for example is like a Dollar General so a lot of dollop Dollar General is out there if you were to purchase one that is a triple net agreement in that you they would be responsible for paying the taxes insurance and maintenance and paying a base rent on the property but you still would be responsible for maintaining the structure in the roof and that agreement however now there is something known as an absolute triple net which means that you literally don't do anything as the owner you pass on everything to the tenant and they were responsible for essentially giving you a check every month known as me and that's what you see a lot of times in single tenant net lease agreements with Walgreens and sometimes Taco Bell's McDonald's that sort of stuff you really are gonna see absolute triple net and what you see did you see done a lot of times with these investors is that they purchase or they do a 1031 exchange they're maybe a little bit older and they don't really want to have to deal with all the management so they would take some of their properties do a 1031 exchange into a single tenant net lease situation with a 10 to 15 to 20 year lease in place and even though they're getting maybe a 5 or 6% return a year they don't really care because there's absolutely pretty much no management whatsoever or they're able to capitalize on some of the benefits of owning real estate but they don't have to deal with the headache of managing the property it's corporately guaranteed by a financially stable tenant and so that's what you see that's where you often see absolute triple net leases so if you're a landlord if you're a tenant which ones would should you choose which one should you go after now it's probably not a great answer but really it depends right there's a lot of factors you consider good condition pre-class I'm sorry oh yeah no worries so there's a lot of factors you got to consider I mean there's there's market conditions if the markets doing well the markets doing poorly what the property classes how well located is it is it a Class A Class B Class C property where is it located based on I think someone's trying to so depending on who depending on the class of property with where it's located along with that comparable properties in the area such as in Casey Rea and various other I'm sorry comparable properties in the area so you have to examine if everyone in that area is giving you a mole modified gross lease then I mean that there's not much you can do right as a landlord to be able offer anything other than that or if you do you got to make sure you modify the base rent in order to attract the right type of tenant in our local market the best way to discover some of these pieces of information is to look at Casey Rea that's essentially the commercial real estate Multiple Listing Service essentially you you can find out even if you're not a member of NAR you could still access that functionality and search for a lot of the information that you need in order to make educated decision now for additional information if you need to talk to commercial real estate agent they can they can look up the additional information for you and help you make the right decision but it is very important to consider all these different factors before pulling the trigger on a particular least type okay and then and then finally what I've kind of want to briefly touch on different things related to Cova 19 because it is affecting quite a bit of commercial people in the commercial space business investors whatever else so if you if you do find yourself in a situation where you're struggling to meet your financial obligations there are programs out there that are helping business owners and investors in this time primarily the ones that that are pertaining to investors are probably the ID IE e IDL advanced so depending on how many employees you have working for you can get up to ten thousand in advance for your operations the PPP loan is something that helps you make payroll for certain for for your particular business on the SBA website it lays out all the different criteria that you would need in order to meet whether or not you can actually qualify for some of these programs if you do qualify consider doing it I mean right now I know that they're talking about how they're running low on funds as it pertains to the the initial three hundred fifty billion dollars or was proposed by Congress but they're already in talks about possibly pushing that number up to help more small business owners and in the in the in the United States and so if you haven't done so already consider doing it I mean it may be an opportunity for you to I'm not a qualified by that I don't have any employees so I'm not trying to fight for that qualify for I the e ideal loan advance especially if you're a super PAC proprietor I don't know how you're structuring your your your investing but if you have if you have an LLC and/or your sole proprietorship you may be able to qualify not maybe not for the ten thousand total but you may be able to qualify for a portion of that so I do a little bit of research to see if that's something that would that would help you out because I know people who have done that and they're able to qualify so food for thought yep and the same thing and we've kind of talked about this I'm sure and in other types of settings but talk to your landlord talk to a property management company banker and try to get and try to get on the same page with them to see if there's any way for you for you guys to work out an agreement because at the end of the day if your landlord and your tenants aren't able to pay it's better that you are able to work with them and it's kind of need so that you maintain a strong relationship long term and you're able to come out of this unscathed because otherwise you're gonna be in a situation where it's not beneficial for either party I know it's not and the good thing about it is though I I'm happy to share these slides I have another like I said I created a booklet that contains all this in four so if you have if you would like that booklet I'd be happy to send it over to you guys I'll make this also available on on Facebook hopefully I'll post this as a video so people can tune in and I was like I was planning to actually I was working with my Jeff O'Brien with like I just start with the commercial property me like not less than like a 50 50 50 units one then I lined up my family family investors like my brother-in-law and other people and Michelle and Ron is helping me with all the kind of equipment like a what's a technical like a working agreement like who - who is what and who is having kind of everything then after that we we created another LLC all the names and everything then after that discove y 19 came up and they're my family people are suggesting me not to move forward at the moment with the commercial property kind of thing so the mind my own one is just a single family thing and I'm partnering with my family people doing that but I kept a pause on that going just a pause for till this kovat non-comic 19 like kind kind mind kind of things are like settle down so I'm waiting on that so one will be jumping on to the commercial multifamily thing that's great yeah I mean and then again because of what's happening right now a lot of banks are kind of putting the brakes on issuing new loans that's another thing to consider I mean I talked to Republic Bank for example there I mean you you know but as far as because Chris is in Cincinnati and Ortega spear Butler County right and Cincinnati I think around Cincinnati and I but Republic Bank told me I have two people that I know that Republic Bank that pretty much told me there they put with the brakes on they're putting their their building up the applications they're they're really focused on trying to issue the PPP loans the e I feel loans and everything else yeah I have one I was rather like no I'm just talking to one of the central central Kentucky federal banks a prince the people are like they're they're okay with the with a single family no mortgage on that so I'm working with that people right now I'm sending all my information to them and I said I have to close on all the property this month I'm single family you know just thing to do go no go kind of thing so I was talking to the people what these other investors are doing with the single family things like understand honey like you know below 100,000 150,000 properties most of us just said they're buying it if the if this nice a nice prom property in nice area and everything is good so they're not jumping aggressively but if everything looks good numbers or everything is good and their investors are buying the property so yeah I mean people still need a place to live I mean I like I said I have four Plex here in Louisville I had to tend to move out early this month she was a senior in college I bought the property no Louisville and so she moved out about two months early so I started marketing the prop the studio apartment that she was occupying maybe about two weeks ago and I got so many applications I probably got I don't know six or seven within two-week period and just picked I just picked someone she's moving in the beginning of May and she's a student and her her mom was gonna guarantee the lease and so it worked out pretty well but I mean I think if you're if your property is located in a good area there's demand I don't see why not jump on it you know that if you have the funds if you feel comfortable at least having some reserves in place I I don't see why it would really affect your decision too much but yeah it's really dependent on you as the investor and what your what your what your goals are what your strategy is as individually I want to build my portfolio with the single-family mm-hmm singing me and my wife at the same time I'm I'm looking at the bigger picture with this commercial problem a multi multifamily commercial from multi multi units that's was that's what that is was i planning like everything with chief O'Brien racial mind these are people helping me to create this structure these are creating a structure so suddenly these came up and it's we paused on that so that people are like like just be planning to get the cake let's get all the core people 100 each we put 400 in the bank account then go for the problem there was a plan as a planning that was a plan so my hundred was day at the three hundred three people three hundred coming into the account so this as of now this right now I'm focusing on single family right now families that's that's great your idea I think it either either way if you do multi family if you do residential if you do retail if you do office you know there's there's all the types of strategies when all the plans are coming in suddenly this came up okay maybe this is like six months or seven months or whatever it is at that time just focus on a single family then jump on the commercial multifamily which was a my plan well you know I mean it like I said if you guys have any other questions feel free to reach out I mean I phone number website so if you want I can send you guys this these slides and I'll send you the booklet that I created that that lays out everything we just discussed and a little bit more detail so it'll reference for you guys to have and yeah I mean if you have any questions you know like me other than people they'll be connecting regularly every time so whenever we have the questions and I know they go to teach art a knock now post also like I said I'm gonna post this on it's a different social media outlets so you be able to read just talk to rob if you should not affiliated to the Kriya but maybe he can send out is this as a separate meeting maybe other people can join this meeting because I don't know how many people know about this today's afternoon meeting man I see the clear meeting minimum of 50 people are joining that meeting every day like I do often on talk to him and he has any other alternates to send the invite to the people but these are like useful information okay thanks guys I appreciate coming on oh yeah oh thank you for hopping on and engaging with with what we're doing and so like I said if you have if you guys have any questions I'm always available thank you I will see you guys all right bye