Unknown Costs Associated With Commercial Leases

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UNKNOWN COSTS ASSOCIATED WITH COMMERCIAL LEASES
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Investing in commercial real estate is one of the
best options for people looking for generating
money.
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One of the most common ways for investors
investing in the commercial real estate sector is
to lease out properties.
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However, most of the time these investors are not
aware of the hidden costs that are associated
with commercial leases.
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Here are details about unknown costs associated
with commercial real estate leases.
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Base rent increases
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Most of the time the base rent you have agreed to
is typically for the first year and in succeeding
years your rent will be increased.
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Most of the time the increase is in the area of 3
percent to 4 percent, however, if times are not
robust, then the owners will negotiate a base
rent that doesn't increase throughout the term.
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Abated rent
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If you are successful in convincing your landlord
to concede some months of base rent as an
incentive for your tenancy, then it is good for
you.
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However, if you are unable to fulfill the
obligation for a full term, then you might be
liable for repayment of the abated rent.
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Operating expenses
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The commercial property taxes, insurance on the
building, maintenance of the foundation, roof and
walls come under the category of operating
expenses.
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If you are a tenant, then you are responsible for
paying these expenses in addition to your base
rent when you are due.
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Moreover, these expenses increase over the term
of your lease and owners have the right to
annually pass on these increases to you.
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Common area maintenance
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It is commonly referred to as common area
maintenance charges and it includes things like
cutting the grass, watering the bushes, trimming
the trees, maintaining the parking lot and other
jobs.
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Moreover, if you are leasing a location within a
business park with multiple tenants, you have to
take into consideration these monthly expenses
while paying your rent.
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Conclusion
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There is no particular method to avoid paying
these additional expenses that are associated
with commercial leases.
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However, you can be aware that they exist and put
safeguards in your lease to limit your exposure
to these additional expenses.
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