When purchasing a commercial property it pays to set some realistic and achievable lease plans and targets. This is fundamental to the future of the property and the cash flow. It can also protect tenant mix and tenant stability.
When looking at a commercial property for the first time, review the leases and occupancy documentation for issues involving:
- Type of rent
- Payment of rent
- Growth of rent
- Rent review processes
- Rent review timings
- Make good requirements for the tenancy
- Obligations on the landlord and the tenant during the lease
- Obligations on the landlord and the tenant at the end of the lease
- Seek out details of lease incentives that may be still current
- Review the outgoings paid under the lease by the tenant and by the landlord
- Look for recoveries of outgoings paid under the lease and how the landlord can get back money for that
- Look for refurbishment or renovation provisions imposed in the lease and how they can impact the tenant or the landlord
Remember the rules as you consider property purchase. When in doubt seek out a good property solicitor before any decisions are made. The critical thing to know when purchasing a commercial property is that you are not just buying the improvements but also the structure of the leases and the cash flow.