I'm unclear about terms-do I do a LEASE OPTION or just a LEASE?? Which is the most attractive?

Question

I own a 3900 sq. ft. commercial building on the main block of a small downtown area. The mountain town is known for it's art and indian collectibles. Sales are soft, even if the town is popular. There are basically three blocks of stores, but I'm on the most heavy trafficked block, so it's a plum. My question is about leasing it. Namely, what is more attractive to most? Do I simply lease it for a certain period of time--and how long? Do I do a Lease Option? Do I do a double net or a triple net?

Of course, I know all are possibilities, but I'm TOTALLY ignorant about all this and want to do what is good for me, but attractive to a potential lessee.

And how do I advertise that I'm willing to lease?? Do I use a realtor? I still have a store in the building as well, and would need two months to sell the inventory, but ONLY if I have someone committed. I am still paying a mortgage and can't afford for the building to be empty, waiting for a lessee. Please educate me.

By the way, I'm aware that I can go to an attorney or commercial realtor. I came here because I want to hear YOUR OPINION!!!

By the way, I'm aware that I can go to an attorney or commercial realtor. I came here because I want to hear YOUR OPINION on lease options, or just leases!!!

Answer 1

The answer depends on what your goals are. A lease-option means the tenant has the option to buy the property. It doesn't necessarily sound like you want to give that up to your tenant just yet.

Triple net leases are good, especially for long term leases - 3-5 years+. They are fair to both tenant and landlord, since actual operating costs are passed through to the tenant.

I think you should go to a good commercial real estate broker to get him/her started on marketing your property for lease.

Answer 2

First off, congrats on owning a prime piece of commercial property. Secondly, you should most certainly make an appointment with a real estate attorney. These are big decisions, and it would be foolish to rely on free advice from strangers on the internet.

Secondly, make an appointment with a commercial real estate agent. They can explain all of your options, the estimated time to sign up tenants, etc.

Ask the attorney about lease options. If you want to eventually sell, like say in 1 or 2 years, then a benefit of the lease option is you can ask for a fairly large deposit right now, which is forfeited to you if they don't follow through with the purchase. However, it's going to take longer to find a lease-option type of tenant than a simple lease tenant.

Commercial leases can be of any length, but are typically for either 3 or 5 years.

But please, get professional, paid-for advice from a real estate attorney. You'll need to find one soon in any case, in order to draw up the papers.

Answer 3

Here is all the education you need:

Hire a lawyer.

I'm sorry, but you don't know enough for anyone to give you advice here to protect you from all of the potential problems involved in being a landlord, ESPECIALLY for commercial tenants who DO know all the ways to duck paying you for the use of your space.

Get professional help from someone that knows the law in your area. There are simply too many pitfalls to advise you to do anything else.