I was hoping that I could get some advice from the collective about a question that I received from a prospective tenant today.
I am in the process of renting out my third investment property and I got an email from someone asking if I accept corporate leases. The wife emailed and said that her "husband works in oil and gas and a relocation company is going to put the lease in their name (the relo company's name).
This is not a situation that I have dealt with before, so I wasn't sure if doing something like this was riskier or safer than my typical person to person lease. If I were to go through with this, what are some of the things that I need to consider or make sure are in the lease prior to moving forward? I am not sure if the relo company would be paying their rent or if the tenant will be. Should I find that out?
Also, how do I deal with an issue where the tenant may need to be evicted (lack of rent payment, etc) ? How do I evict "a company" ? Or again, are there provisos that I would need to make sure are part of the lease that wouldn't put me into a pickle?
As I talk through it, it sounds more complicated than I feel like dealing with, but wanted to get some thoughts from folks who have some experience in this matter.
Thanks in advance!
I've heard of others who have done this in the past. Though, it would depend on the type of clientele the company wishes to put in. Most I know who have gone this route have worked with contractors for the company which has resulted in more wear and tear. The positive is that you get consistent business.
Regarding evictions, I have not known anyone to have issues. Usually, the company's corporate office will take care of the bill.
Hope that helps!
I spoke a bit more to the prospective tenant and they said that they themselves (not the relo company) will be paying the rent. So, the obvious question that came to my mind to go back and ask them is "Then why not have the lease in your name?" Am I missing something there? Again, this is my first request from someone to use a corporate lease so this concept is a bit foreign to me, but why would you want a corporate lease if a company isn't paying the rent?
What they are saying they want the lease in a business name not a personal name.
Just guessing here, the corporation has a lot of employees moving around a lot. These folks need housing but may need to move before the lease term is up. With the lease in the corp name the corp can negotiate a longer lease (cheaper) and put someone else in the house if the original folks have to move.
Like I said, this is just a guess and I am interested in the real answer.
My understanding from speaking with the prospective tenants is that they are the only ones planning on living there over the course of the next year (maybe longer?). I am not planning on negotiating the rent.
So, I am guessing from the lack of responses about actual experience with corporate leases that many people do not have experience with them? I'm sorry, but I don't feel like we are near my original question at all.
We fell into one here (back in the '90's) on a large older home we owned.
The corp did have the lease in their name & direct deposited the payments & we had a 6% p.a. Increases built in. Our attorney drew up the lease agreement.
The occupants would range from single execs & a couple of families over 8-9 years. My son loved it whenever one would move as he would score a new Bose system or TV that they couldn't take back to Europe & we ended up with some nice pieces of furniture they left behind.
The corp paid for all maintenance & repairs in fact we were surprised to find the kitchen floor redone with all new high end appliances. They even sent all the removable screen doors surrounding our large porch to their maintenance shop to be rebuilt. That corp eventually abandoned the area with the last CEO traveling between our home & their newly built plant in China.
In hindsight I guess we were lucky & never had to face the possibility of an eviction or damages but that is something that was addressed within the lease. In fact when we met each of the executives (several were from Finland) we never had any concerns. Whenever the place was vacant between occupancies the corp still took care of the property. In fact one winter they had their guys on the roof shoveling off the 3 foot of snow we had.
We currently have it on a 4 year lease to a military officer stationed here with an option to provide it for future personnel destined to be stationed here.
So for us it has been a very positive & rewarding experience
@Pat L. I have a similar situation where I am in the process of renting out my condo to a corporation that will have visiting consultants in the area. Would you mind sharing a copy of the lease that you did (delete all the confidential info ofcourse) Just want to get an idea of how the lease may differ from a lease to an individual.
Also did you do a background/credit check of some type on the corporation?
I checked my files but no longer have that specific lease.
At the time we didn't do a background check per se as it was an old well established Corp. The only leases we have now are NNN on commercial properties we own.
ours was luck...
we had it advt for rent at the local University & I guess someone @ the company saw the advt & the rest is history.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing