Lease Questions

[Butch46]

I've made an offer on a site and am now waiting for the landlord/seller to respond. I'm pretty sure they will be asking for maximum rent for the area, plus triple net. And the agent said they will probably want cost of living increases and include a percentage of sales in the rent calculation. Is all of this standard, or, should I be wary of this opportunity?

[CanCanCase]

With little or no detail to fall back on, everything you've described sounds fairly "normal" for my area. Every market will be different in terms of what's usual and customary.

If you don't have a good deal of experience in commercial real estate buying/selling/renting/leasing, you might enlist the services of a good attorney. At the very least, a real estate professional can show you comparable properties and provide information about what's "normal" in your market for terms, costs, etc.

-Case

[rbh]

The percent of sales piece I wouldn't go for.....thats 'big mall' language usually reserved for big box stores. Has no place in a lmat lease.

[Adamski]

Originally Posted by rbh

The percent of sales piece I wouldn't go for.....thats 'big mall' language usually reserved for big box stores. Has no place in a lmat lease.

Ron,

I agree. In the old days, it was not uncommon for laundromats to pay a percent of Sales to the Lessor. Today, the Triple Net is a substitute for the percent of Sales and, like you, I would never agree to percent of Sales.

[Howard]

It all depends on the terms. Percentage of gross sales could be fine, it all depends on what the bottom line is. Heck, if business slows down this works in your favor. Check the details and get some expert advice. Good luck!

[STOUT]

Also toss out the "cost of living increasing". That can be a very costly increase.

[Butch46]

Hi there, This is Mrs Butch46.

We are unable to be completely open because we are under a non disclosure. But I can give a little more information.

We have a attorney we have used in the past to open a business and will use him to look over the lease. But these decisions will be made before a attorney is involved and we wanted to know if this is in fact customary.

How would this percentage be figured out by your bank deposits? It seems like a huge intrusion into someone's business and privacy.

The coin laundry was trashed by the former owner. He basically drained everything he could out of it and rarely fixed anything. It needs a lot of work but it is a generally high volume coin laundry. Good demographically. The previous owner is out of the picture. We are dealing with just the landlord.

A week and half ago we sent the landlord a full offer, our credit reports and a financial disclosure on all our personal assets. He has yet to get back to us. Is this common to wait on a offer? I get that the property owner is concerned because of what happened with the former coin laundry owner. We check out great financially, our FICO score high 800 etc.

During this waiting period our broker told us the owner was looking at a shorter term on the lease than we asked for. Triple net plus a percentage of the gross sales. There are two other places of business plus the coin laundry that will be covering all the expenses for this property.

The deal is perfect for us as our first coin laundry but I have some concerns now. In any event we will be asking hard questions this week.

Thank you everybody for all your valuable comments.

[ldm]

Originally Posted by Butch46

I've made an offer on a site and am now waiting for the landlord/seller to respond. I'm pretty sure they will be asking for maximum rent for the area, plus triple net. And the agent said they will probably want cost of living increases and include a percentage of sales in the rent calculation. Is all of this standard, or, should I be wary of this opportunity?

So much depends on the location, local economy, terms, and specific details about this particular property...you should check with a local real estate broker that deals in commercial properties to show you comps and guide you thru this process. The "probably" in the agents statements may mean they are fishing to see how much you will tolerate by your reaction to their pitch. Les.

[CanCanCase]

If you're able to wait until July 17, Bob Eisenberg is doing a webinar titled, "Signing a Lease: What You Need to Know."

If anyone knows about leasing spaces for vended laundries, Bob Eisenberg is the guy to listen to! I own all of my properties, but I'll give this one a listen too...

-Case

[MrsButch46]

We will for sure check that out. I love to get as much information as we can. But I think a decision on this coin laundry will be made by then. I think I will insist. If it is not going to work then we need to move on. Normally we would place a limit on the time to counter or accept but we let the broker handle this one.

We have taken a coin laundry course and we have researched (I started in 2008) and attended some bay area meetings.

This is a new one for us but we learn something each time we check out a coin laundry. I may do some checking around for that area today.

I do want to be on that webinar.