Leasing Properties

A lease is basically a partnership with the owner of the building. The best leases happen when the tenant and owner work together to make sure they have a symbiotic relationship. Remember, owners have expenses too. I hear to many times how the owner is taking advantage of the tenant and the tenant feels the owner should be doing more for them. But the reality is when you sign a lease agreement, the Landlord is responsible for certain agreements within the lease and the Tenant is responsible for other agreements. It’s always best to understand the lease you are signing before you sign it. It’s also a good idea to know get an idea what condition the space is in before you lease it. If you as a tenant are going to be responsible for the maintenance and replacing of the HVAC, you should know how old the unit is and if there is still a warranty on the unit. If the unit is 20 years old, you need to address the replacement of the HVAC in the lease agreement before you sign the lease. There will always be unforeseen events throughout a lease so be good to your Landlord and pay your rent on time and you will see, when the time comes he/she will be better to you when it’s time for you to need something from them.

Why should I use 1001brokers.com to find a Real Estate agent to represent me? At 1001brokers.com, we use professional brokers to help find you the right property. You are free to use our directory of Real Estate agents to find the right agent for you or you can fill out the form and we will post your requirement to our Preferred agents in your area and see who is best suited to helping you find the right property. We are here to make sure you get the building you want and therefore it is very important that we qualify each agent before having them contact you directly.

Why do I need a Real Estate Agent to represent me? Don't underestimate the value a good Real Estate Agent brings to a deal. Real Estate Agents are there to not only to get you the best deal, but to make sure you understand the process. A good professional Real Estate Agent will know the area and should advise you what other properties are selling or leasing for in your area. Real Estate Agents have access to public records, comparable properties, properties available and a network with other Real Estate Agents to help you find the right property. A professional Real Estate agent has to abide by the DRE and governing regulations. Real Estate agents also have liability insurance and have a fiduciary responsibility to you.

How do I find the right Real Estate Agent to work with? At 1001brokers, we have a full directory of Real Estate Agencies and agents we work with whom are professionals in your area. Make sure the agent you work with understands what you want and how you work. Feel free to interview a couple different agents, email them and ask questions about their experience in the area, what their expertise is, and discuss what you are looking for. Make sure to be honest with your agent. Remember, agents usually work on commission so their time is important so ask the right questions about what you are looking for. Agents are there to work for you so if you're not comfortable with an agent keep interviewing until you find the right agent for you.

What is a procuring agent? A procuring agent is the agent that brings a Tenant/Buyer to the property. They are the procuring cause of the transaction. This can means they represent the Tenant/Buyer even if you contacted the listing agent directly.

How does my agent get paid? Most transactions are paid by the owner of the property. However there are cases where the owner will not pay the procuring agent and the Tenant/Buyer will have to pay their own agent. It is rare but again you might have to pay your own agent in certain instances. In most cases where you will need to pay your own broker, the broker should inform you as soon as they know.

I started working with the listing agent but do not feel comfortable, now I want my own agent? You are always free to use whomever you want to represent you. However, there are some instances when you might be responsible to pay your own broker for their services. The first would be if you sign an exclusive representation with an agent to represent you. If the ownership is not paying a fee to the procuring broker, and you have an exclusive representation which states you might have to pay their fee, you will be responsible to pay your own broker. Most listing agreements are between owners and listing brokers. The listing broker then pays a fee to the procuring broker. The listing broker and the procuring broker agree on a fee before the transaction is complete. Most of the time the fee is split 50/50 but in certain instances that is not always the case.

Why shouldn't I just work with the listing agent? Remember listing agents work for the owners so their main goal is to get the owner the best deal they can. Although you are free to work with whomever you want, you really should find someone who represents your best interest and is impartial to that specific property. Your agent should be showing you multiple properties so you have the choices within your marketplace. Even if you feel you found the right property, it is always good to know what else is out there and have your agent educate you by showing you the comparables to the property you are looking at. Since a listing agent wants you to only look at their property, they might not show you other comparable properties. Your agent, which is called the procuring agent is there on your behalf. Make sure you get the most out of your agent and ask lots of questions.

If I call the listing agent directly, do I need to work with them? No, the best practice if you are calling a listing agent is to inform them right away you are working with an agent already and they will be contacting the listing agent to get more details and schedule a showing of the property. It's always best to the procuring agent, your agent, call the listing broker directly but if you feel you want to talk to the listing agent directly, there is no harm in doing so. Just understand the more you talk with the listing agent directly, the more they feel you are their client and might not want to pay the procuring agent since the listing agent feels they brought you to the building and are the reason you want the property.

Real Estate Agents are professionals within their community. Their value lies in the knowledge they bring to the deal and the correct way to go about a transaction. It is also important for Tenants and Buyers to understand the process of a transaction and to understand you as their client.

Why do I need to provide my personal financial information to the landlord in a lease? Remember a lease is basically a partnership between the Landlord (Lessor) and Tenant (Lessee). Just like you the Landlord has bills to pay and if you as a Tenant do not pay your rent, the Landlord cannot pay their bills. The worst thing for a Landlord is a bad Tenant. Knowing the Tenants financial history, calling their previous Landlords, and running a credit check to make sure the Tenant pays their credit card and loans back on time is the best way to verify the Tenant will be responsible and credit worthy enough to lease to.

Won’t a Landlord want to charge me more if they know I have money in my account? It is possible the Landlord will feel they can afford to pay more, but you then have the right to not take the deal and that Landlord will lose a great Tenant. In most cases, the better your credit and financial worth the more that Landlord will want you as a Tenant. Again, there is nothing worse for a Landlord than a bad Tenant. Good credit and strong financials can help you negotiate a smaller security deposit, more free rent, and possibly even lower rent. This will be up to how good your agent is at negotiating the best deal for you.

How do I know what a good deal is? Every Landlord wants the most they can get out of a deal and every Tenant wants the best deal they can get so what is the right answer as to that is a good deal? That is up to you to decide what you can afford. The best deals happen when both the Landlord and Tenant stretch the deal to make the other party Happy – or both parties make themselves a little unhappy as I say. The reality is you should have a strong business plan and understand what you can and cannot afford. Never feel you have to have “this property” and you should always be willing to walk away from a deal you cannot afford. On the other hand, if you are stretching just enough to get the property you really want, don’t ever feel the owner is taking advantage of you. Again, owners have bills to pay and they need to make money too.

What are the differences between NNN, Gross, Full Service? There are different types of leases you should know about and understand when purchasing property.

  • Gross Lease: there are different forms of gross leases and different names depending on the type of property and location within the country so make sure you understand what you are responsible for if you choose to buy a leased investment with gross leases. You might hear gross, modified gross, industrial gross, modified industrial gross, or other forms of a gross lease. Typically, they all mean the same type of structure but each just implies the owner is responsible for something different. The typical gross deal means the owner is responsible for paying the taxes and insurance along with the outside maintenance of the building. Example would be the roof, sidewalks, driveways, gardening, and structure of the building. Tenant is usually responsible for the interior maintenance of the property, HVAC maintenance but not repair, phone, cable, internet, and plumbing within the space. However, every gross deal is different and some owners require the tenant to pay for their own gardening, or if the owner just installed a new roof, maybe they pay for any roof repairs etc. That is what you would call a modified gross. Modified just means they changed the structure of a typical gross deal in your geographic area to something different. This is the most common lease agreement in industrial properties but you will see retail properties using a gross lease. If you are not planning to sell your property before the lease is expired and you do not use a management company, you might consider a gross lease. Gross leases incorporate one payment a month and make it easier on the owner to know what the tenant is paying. It’s also easier on the tenant since the tenant know what they are paying each month.
  • NNN Leases: A true triple net lease means the tenant is basically responsible for just about everything on the property. This is mostly used in retail centers with management companies. Most buyers like NNN properties because the tenant is typically responsible for maintaining the entire property. The tenant also pays the property taxes and building insurance. Sometimes you will see NN Lease. NN leases mean the tenant pays the property taxes and building insurance but not all the expenses for the property. Landlord might be responsible for the roof replacement/maintenance or the driveway repairs in a NN lease. If a buyer is looking for a true leased investment, they will typically look for NNN lease before settling on a NN lease. However, there are rules associated with NNN leases and most NNN leases have property managers who take care of the property since there are certain items you can and cannot pass through to the tenant. You also have to keep good records as tenants are allowed to see what they are paying for if you are charging the on a NNN lease. NNN leases are best for bigger companies like a McDonalds, Starbucks, or multi-tenant buildings like strip centers and retail centers where you have property managers.
  • Full Service Leases: A full service lease means the Landlord pays for everything except phone, cable, internet. The tenant pays one bill and the landlord pays for the property taxes, building insurance, common area maintenance, electricity, utilities, garbage, and janitorial. Full service deals are typically used in large office buildings. The landlord adds all their expenses together and charges accordingly.

What is common area or load factor? The common area is area which is shared with someone else within the center or building. Since this area is used by more than one tenant it is common to that property. Some owners charge extra for the common area. This is usually called a CAM charge. Other owners will incorporate the common area into your lease rate. Some owners will add the common area into your square footage for the lease which is called a load factor. Example would be your space has 900 sq ft of usable space, but the owner has a 10% load factor or common area charge which means he is actually charging you for 990 sq ft. You also see a load factor for outside seating in restaurants. It’s fairly common and typical in office buildings to see a load factor.

Why do I need a Real Estate Agent to represent me? Don't underestimate the value a good Real Estate Agent brings to a deal. Real Estate Agents are there to not only to get you the best deal, but to make sure you understand the process. A good professional Real Estate Agent will know the area and should advise you what other properties are selling or leasing for in your area. Real Estate Agents have access to public records, comparable properties, properties available and a network with other Real Estate Agents to help you find the right property. A professional Real Estate agent has to abide by the DRE and governing regulations. Real Estate agents also have liability insurance and have a fiduciary responsibility to you.

How do I find the right Real Estate Agent to work with? At 1001brokers, we have a full directory of Real Estate Agencies and agents we work with whom are professionals in your area. Make sure the agent you work with understands what you want and how you work. Feel free to interview a couple different agents, email them and ask questions about their experience in the area, what their expertise is, and discuss what you are looking for. Make sure to be honest with your agent. Remember, agents usually work on commission so their time is important so ask the right questions about what you are looking for. Agents are there to work for you so if you're not comfortable with an agent keep interviewing until you find the right agent for you.

What is a procuring agent? A procuring agent is the agent that brings a Tenant/Buyer to the property. They are the procuring cause of the transaction. This can means they represent the Tenant/Buyer even if you contacted the listing agent directly.

How does my agent get paid? Most transactions are paid by the owner of the property. However there are cases where the owner will not pay the procuring agent and the Tenant/Buyer will have to pay their own agent. It is rare but again you might have to pay your own agent in certain instances. In most cases where you will need to pay your own broker, the broker should inform you as soon as they know.

I started working with the listing agent but do not feel comfortable, now I want my own agent? You are always free to use whomever you want to represent you. However, there are some instances when you might be responsible to pay your own broker for their services. The first would be if you sign an exclusive representation with an agent to represent you. If the ownership is not paying a fee to the procuring broker, and you have an exclusive representation which states you might have to pay their fee, you will be responsible to pay your own broker. Most listing agreements are between owners and listing brokers. The listing broker then pays a fee to the procuring broker. The listing broker and the procuring broker agree on a fee before the transaction is complete. Most of the time the fee is split 50/50 but in certain instances that is not always the case.

Why shouldn't I just work with the listing agent? Remember listing agents work for the owners so their main goal is to get the owner the best deal they can. Although you are free to work with whomever you want, you really should find someone who represents your best interest and is impartial to that specific property. Your agent should be showing you multiple properties so you have the choices within your marketplace. Even if you feel you found the right property, it is always good to know what else is out there and have your agent educate you by showing you the comparables to the property you are looking at. Since a listing agent wants you to only look at their property, they might not show you other comparable properties. Your agent, which is called the procuring agent is there on your behalf. Make sure you get the most out of your agent and ask lots of questions.

If I call the listing agent directly, do I need to work with them? No, the best practice if you are calling a listing agent is to inform them right away you are working with an agent already and they will be contacting the listing agent to get more details and schedule a showing of the property. It's always best to the procuring agent, your agent, call the listing broker directly but if you feel you want to talk to the listing agent directly, there is no harm in doing so. Just understand the more you talk with the listing agent directly, the more they feel you are their client and might not want to pay the procuring agent since the listing agent feels they brought you to the building and are the reason you want the property.

Real Estate Agents are professionals within their community. Their value lies in the knowledge they bring to the deal and the correct way to go about a transaction. It is also important for Tenants and Buyers to understand the process of a transaction and to understand you as their client.

Why do I need to provide my personal financial information to the landlord in a lease? Remember a lease is basically a partnership between the Landlord (Lessor) and Tenant (Lessee). Just like you the Landlord has bills to pay and if you as a Tenant do not pay your rent, the Landlord cannot pay their bills. The worst thing for a Landlord is a bad Tenant. Knowing the Tenants financial history, calling their previous Landlords, and running a credit check to make sure the Tenant pays their credit card and loans back on time is the best way to verify the Tenant will be responsible and credit worthy enough to lease to.

Won’t a Landlord want to charge me more if they know I have money in my account? It is possible the Landlord will feel they can afford to pay more, but you then have the right to not take the deal and that Landlord will lose a great Tenant. In most cases, the better your credit and financial worth the more that Landlord will want you as a Tenant. Again, there is nothing worse for a Landlord than a bad Tenant. Good credit and strong financials can help you negotiate a smaller security deposit, more free rent, and possibly even lower rent. This will be up to how good your agent is at negotiating the best deal for you.

How do I know what a good deal is? Every Landlord wants the most they can get out of a deal and every Tenant wants the best deal they can get so what is the right answer as to that is a good deal? That is up to you to decide what you can afford. The best deals happen when both the Landlord and Tenant stretch the deal to make the other party Happy – or both parties make themselves a little unhappy as I say. The reality is you should have a strong business plan and understand what you can and cannot afford. Never feel you have to have “this property” and you should always be willing to walk away from a deal you cannot afford. On the other hand, if you are stretching just enough to get the property you really want, don’t ever feel the owner is taking advantage of you. Again, owners have bills to pay and they need to make money too.

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