this has been on my mind:
how have you mitigated risk of a loss of lease, leading to loss of your investment?
i don’t see any ideal solution, if a long-term lease is undesirable. but in the absence of a long-term lease, there is exposure or even room for exploitation.
scenario: mom and pop business, salon/spa, purchase and build out of business is tens of thousands (any number you like). if not renewed, then everything is lost. there is no business to sell. it’s impractical to strip and store fixtures, hoping to sell used equipment. leaving the space empty for a couple of years would pay off for a landlord who wanted to pick up a ready-to-run spa.
seems like this is a risk for any small shop that can’t commit to indefinitely renewable lease. what’s a good practice? i suppose you need to discount the apparent value of such a business, before you settle on a purchase price.
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If you are buying the business normally you would take over their lease. The lease should have information about lease renewals.
Hinestoy the massive spike in real-estate tax hit commercial l properties also. My leae went up 1k a month and probably will go up another 1k at the next lease negotiation. Is this why they are selling the business? How profitable is a hair salon?
Those r huge increases. Rare that a LL gets the opportunity to raise rent like that AND keep the tenant. GL.
Luckily for me the original lease was very generous, and my business is highly profitable as well as succesfull and popular. It was easy to make up for the increase with a very slight increase in my billable hourly rate.
Make friends with landlord. I personally have made myself the landlord’s “pet”. I am the place they keep keys to the complex, so if a maintenance company or prospective tenant needs access it saves LL or agent from having to be here every time. Keeping a human relationship whenever possible provides some security and works both ways for LL. YMMV
You need to speak with a real estate attorney who is an expert in commercial leases. Have them evaluate the current lease and see what the risks are. Have them suggest lease terms that could offer the protection you’re looking for, then see if the current landlord is open to extension/renegotiation.
Commercial leases can be quite complex and it’s best to have an expert to guide you. If you try to DIY things based on Google searches and/or advice from Reddit, you could end up in bad place.