Sign Michigan Banking Month To Month Lease Computer

Industry sign banking michigan month to month lease computer

but at least as much more than that really the most important thing about of Elysee is the terms terms and terms so today I'm going to discuss kind of the basic terms that consider for a business owner who's thinking can you extend my lease or negotiate a new lease so that I have value in my business and then if I have one ready to sell it it's still a good lease and a good business to sell to a buyer okay so question for the group who knows the difference between a gross lease and a net lease Patrick go ahead Patrick well there's different types on a gross basis definite landlord right so essentially to make a simple a gross lease you have basically have fixed rent next month this month it's the same amount whether the property taxes come in or there's a big roof project of main residue for your building whereas in a net lease you have a base rate Plus then you're responsible thing for the property taxes the property insurance and the maintenance so retail leases tend to be net leases so it's very important to know the condition of the property in the condition the ownership that gets us to our first plane which is knowing your base rate just because property a is leasing for two dollars square foot base rate and property B is a 225 a square foot base rate and they're about the same in terms of foot traffic does it make the $2 property better because their operating cost might be 60 cents a square foot where the other property might be 10 cents a square foot so you added up as 235 versus 260 big difference so how do you know you know which space is better you really have to do a survey of leases that were assigned recently in the immediate area to see where they sign a $2 square foot or 225 or 250 and then you also want to do some reconnaissance on the landlord did they just recently buy the property are they flippers are they going to fix up the property and sell it or are they going to be long-term holders you really want to invest in up or get into a property held by a landlord long-term investor because if they sell a property in one or two years what happens the property task gets reassessed and if this property was last reassessed in 1965 and it gets reassessed at 2012 dollars you can bet the property tax is going to go through the roof and in a net lease who pays that the tenant so it's important to do this homework so sometimes a cheaper base rate isn't better so that gets to our our next point which is now the indexing the lease does anybody have an idea what the word indexing means in the leasing room Jelena actually no I'll take this one defer to you so indexing essentially means if you have a lease is it going to increase every year is it going to increase every two years or every three years and so indexing usually comes down to a percentage whether it's a fixed percentage of 2% 3% 4% 5% per year or then variable whereas based on CPI and so people always ask what's better fixed or variable and you get both answers really whatever your preference is but as a tenant you are almost typically much happy with a fixed increase per year because you can budget ok next year my rents going to go up 3% and then you're after is going to about 3% vs. okay CPI may be one percent this year but it may be five percent next year and you have no idea how to budget it's important to consider and negotiate the landlord so you make sure you're indexing isn't too high five percent of the sound like a lot after five years of five to seven years of five percent increases it adds up very fast okay so length of the lease is a third thing I want to talk about if you're in a retail business you for sure need a long lease you can be signing up a year at least for one or two years if you put in a lot of money and tenant improvements because you may be out one or two years when the landlord says I want to double your right now so it's important of a long term lease and that's really especially important for your buyer your buyer if you've built up a good business they're going to pay you a lot of money for your business and they don't want to be out one or two years lackaday a chance to return their money on the investment they committed okay so that brings up our next point which is a lease assignment clause if you sign a lease isn't your name or your company's name it's important to have a clause in that least that says when you sell your business your landlords not going to withhold reasonable consent to transfer your lease but beyond that some of the important things to consider is sometimes there's an assignment fee now for the landlord's time and energy invested in in processing the the transfer request so whether it's a few hundred dollars or a couple thousand dollars you can maybe say it's reasonable for attorneys time or the landlord's time to process it but you really want to be careful for the landlord's light to slip in some that says okay when the business sells and transfers we get 40% of the sales price as our fee and all of a sudden you're not very happy because you sell your business for X and also an almost half is going to your landlord so a lot of people when they're signing the lease don't pay attention to that they're just worried about the base rate okay my base rates good okay what can I sign and always pay attention to your assignment clause always the last thing we'll talk about is the personal guarantee when you sign a lease typically a landlord wants your fingerprints on that leads personally guaranteeing that if use your business goes under you're still going to perform and pay the rent every month the next four or five years of ours left and a link that lease and so there's really not much of a way around that in a retail business so obviously be very confident when you get into that business but number two how that comes up is let's say you sell your business and then your buyer takes over and then they fail after a year and there's still three years left on the lease land lers going to call you up and say hey mister so-and-so your buyer didn't work out they can't pay me so you have to pay me so very important when you're negotiating your assignment clause and your personal guarantee Clause is to try to get yourself removed as a guarantor when your lease is assigned this way you're washed clean with that all of up to any basic questions to yeah is there a way to get yourself out a lot of us or small corporations small business owners can we get ourselves out of being a personal guarantee is there any way to negotiate that out you it's ideally negotiated before you sign the lease you negotiate that clause is it negotiable typically not when you're in the middle of the lease a bully not so it's just something that I always say to everybody if you have friends family or clients negotiating a lease a lot of times are come from doing themselves have done it before but these small little things come in and then come in to bite them later so it's always important to have a professional come in to review the lease and properly negotiate can the personal guarantee be transferred to the new buyer well it always has shrimp what happens it's not transferred if a buyer comes in there person guaranteed it and so are you unless you've negotiated that you're going to be removed on assignment beforehand retail leases 99.99999% thank you