Investor · Schenectady, NY · Member since 2012 · 9 posts · 3 votes
I'm waiting to close on a new property. 2 occupied storefronts, one bedroom, and a "bare-bones," unoccupied storefront currently being used as a shop/warehouse. I'm new to non-residential so, my question to all the experienced investors out there is where do I draw the financial line between me and the potential renter? I need to rent this warehouse. Is it common for renters to put up 100% into creating their optimal space? I'm sure the obvious answer is "it depends on the terms and the business." but, I'd like to know what the usual agreement is. The way I'm thinking is I'll put the basics into it. Drop ceiling, lighting, sheetrock, resurfacing the floor, commercial style doors, better heating system, ect and leave the rest up to the renter. I like to think of it as constructing the frame, stretching the canvas and letting them buy the paint and do the artistic work on a nice, clean, new, canvas. I'm trying to think outside of the residential thought process and accept the freedom of commercial ownership. Any thoughts will be greatly appreciated.
Very much depends on the tenant. Some need $20k in tenant improvements, and some need zero. All depends on their needs. Its all negotiable, which is nice.
I own two commercial storefronts and the approach I have taken is that I will take care of upgrading systems - new furnace/AC and updated electrical panel but leave the build out up to the tenant. I have given a rent credit in the past but stop short of putting in new fixtures, walls, ceiling, etc.
My thought is that my business is real estate and their business is whatever (small grocer and resale shops in my case) and if they aren't confident enough to make the required investment in their business then how can I feel confident as their landlord.
Thanks for the quick replies. Fred, I like your approach and I think we're pretty much on the same page here. Any other general suggestions? Articles you've found useful in the past? Choosing a type of lease? Thanks again guys