Investor · Wasilla, AK · Member since 2016 · 277 posts · 139 votes
I currently have a potential tenant that wants to sign a 2 year lease for a commercial shop. They also want 4 two year extensions. That means they are committed to the current terms for 2 years, and I would potentially be committed to the current terms for up to 10 years.
I figure I need to work in a 3% minimum annual increase to cover inflation and cost of utilities. Does anybody have recommendations or other areas that I need to cover myself when making this long of a commitment?
Sam LLoyd to lessen the potential burden I would personally attempt to decrease the overall time they are requesting. How about just two 2-year extensions? That equals 6 years, instead of 10. I would say AT LEAST 3% annually but I don't know your market. My markets see rents increasing substantially more than 3% annually. I am in residential though and not commercial.