Hi all, There's a local real estate agency that advertises buildings for rent well below what the going rate is for this area (this county has the highest cost of living in the U.S. !)
I went to look at one and it looked like it was perfect for a funky old signshop. Then the agent tells me, "So, the rent is $550, PLUS $360 property taxes, PLUS $63 insurance, PLUS you pay for utilities..." So, now we're up to around $1,100, which is more realistic for this area.
The agent says the tax bill will go to me directly. Why should I be responsible for the tax bill in MY name, when it's the landlord's property? Why do I pay insurance on the landlord's property? Why can't they just tell me the rent is $1,100, like all the other real estate places do, and it's assumed that the taxes, etc. are absorbed into that cost.
Strangely, they don't seem to be all that urgent about renting ANY of their properties - the building I looked at has been empty for some time (there was a phone book from 1998 inside!!!) I really like the building though but I wish they were more straightforward with the rent price.
Peter Manzolillo Jet Signs Long Island, NY jet22@mailcity.com
Posted by Mike Kelly (Member # 2037) on :
Peter, if the price of 1100.00 is something you can afford, tell the realtor you'll rent the place but want nuthin' to do with the tax bill or insurance. If they really want to rent it out, then they should agree, otherwise I think you may be getting into something you'll regret later. You should probably talk to a real estate lawyer to find out what you could/would be responsible for.
------------------ Mike"Spud"Kelly theSignWorx Ashburnham, MA 978.827.4439
"Your reputation is made by others; your character is made by you."
Posted by Kevin Landry (Member # 1352) on :
Sounds good to me. Your tax bill is so much a year. You pay Business Occupancy Tax and then they pay property tax. (that is the way it is done here) You only pay it once a year. I don't know your tax laws. Utilities are a normal cost of doing business. You lease a car and GM don't pay the gas and $63.00 a month sounds cheap. Insurance is something you need in this business anyway. You are also responsible for any damage your business causes to the building and if a fire starts in your shop caused by you, you better have insurance. (that is the way it is done around here) Sounds like he gave you a breakdown in what it will cost you to run your shop. Easy way to work things out. Rent is normally pretty cheap. It is the other guys with the hands out that start to cost. Heating/cooling/ phones, faxes, taxes, internet, lights, insurance, web site, cell, garbage removal, etc etc etc. It ain't cheap but I think you get the idea. One more thing, get as much as you can now from him. Like parking, signage rights, right of way, use outside of building, storage and beat him up a bit over price. Get it in writing. If you don't then you will have fight on your hands if want to change it later.
------------------ Kevin Landry KnL Signs Halifax NS knlsigns@hfx.eastlink.ca
Posted by Troy Haas (Member # 472) on :
Peter, That deal is what they call(around here anyway) a "Triple Net Lease" Where you pay rent,taxes and insurance. They are pretty common here, several properties I looked at were this way. If you don't like having the taxes in your name, then as above, agree to pay the said cost but to the landlord. It will cost you the same no matter what, at least if you pay it you know the taxes are paid and the goverment won't confinscate the building, but that is probably not the case since the owner has been paying the taxes, but I would check.
------------------ Troy Haas "Metal_Leg" on mIRC
SAM Signs "At old Hose House No. 8" 931 W. Columbia street Evansville,Indiana 47710 812-437-5367 Home of the: "Brush Fire at the Hose House" Letterhead Meet April 27-29th,2001
"Chaos, panic, disorder - my work here is done."
Posted by Dave Ginley (Member # 1723) on :
I used to run a chain of stores in Pa and NY and what you describe is standard operating procedure with corporate type rentals....kevin is right on the money though, beat him up a bit. Don't be shy about that and also ask for some rent abatement if the building has been sitting a couple years, this can give you a little extra cash to fix things up..even if it's the perfect building you'll have to change things, add things...etc...
Good Luck,
Dave Ginley
------------------ Ace of Signs Selinsgrove, Pa. www.aceofsigns.com
Posted by roger bailey (Member # 556) on :
Get your own Ins. policy, one (comercial) that gives you coverage for more then just the owners bldg.. Like anything else you must shop around, included in these policies is "liability coverage" just in case you cause damage to a customers bldg., buiss., or reputation (even has some coverage in there for the owners bldg. and your stuff.
The last shop I rented(5 year lease) I negociated for 3 months "free rent" because of upgrades I had to do to owners bldg..
Roger
------------------ Roger Bailey Rapid Tac Incorporated Waikoloa, Hawaii
Posted by VICTORGEORGIOU (Member # 474) on :
Peter, the above posts cover triple net pretty well. You can also run into Common Area Maintenance (CAM). The sidewalk cracks, the landlord repairs it and sends you the bill. And then there are some tricky clauses that can be used to bill you back for other things including structural repairs. The wording always sounds pretty innocent. An honest rep will explain all the clauses to you, but it is always wise to have your expert read the lease before you sign it.
There is a shopping center down the street. All the tenants were complaining about skateboarders. The landlord hired a security guard to shoo off the kids. Then he billed the tenants back under the CAM clause. Funny how they stopped complaining about the kids after that.
In summary - nothing wrong with a triple net lease as long as you are clear what you are signing for. Vic G
