10 Top Must Knows For Commercial Real Estate

admin — Fri, 25 Dec 2009 19:14:26 +0000

Appraisal: is a written report by a “state-licensed professional” we want to make sure its a unbiased analysis of the property’s value and not influenced by the purchase price. An appraisal report is not always required to close but it should be.
Broker: a real estate agent who brings together a buyer and a seller, or a landlord and a tenant, in a real estate transaction. As I teach broker’s make the best bird-dogs as most work on commission, and the landlord or seller usually pays the fee.
Build-to-suit: a simple method of leasing property in which the landlord makes improvements to a space based on the tenant’s specifications. Make note… most build-to-suit provisions apply to long-term (10-year) leases or more.
Concessions: a concession is pretty simple… these are the benefits or discounts given by the seller or landlord of a property to help close a sale or lease. A lot of times these are key parts in the negotiation and common concessions include moving expenses, space remodeling, or upgrades also called”build-outs”.
Escalation clause: this is a clause in a lease that allows the landlord to increase rent in the future. You should know this one… The rent increases under an escalation clause may be charged in various ways, including but not limited to:

• A fixed increase over a definite period

• A cost-of-living increase tied to a government index, such as the tax rate

• An increase directly related to increases in operating the property
HVAC: an acronym for “heating-ventilation-air-conditioning” system. In a commercial building, the landlord generally is responsible for maintaining the HVAC equipment.
Lease: Although there are several its plain and simply an agreement by which the owner of a property (the “lessor”) grants the right of possession to a tenant (the “lessee”) for a specific period of time (the “term”) for a predetermined amount of money (the “rent”). The types of leases are recognized as the following:

• A straight, or flat, lease, which stipulates that the same periodic payment (usually monthly) be made for the entire term of the lease.

• A percentage lease, which uses a percentage of the net or gross sales to determine the monthly rent. This is most often used in retail properties and with a minimum base rent.

• A net lease, which requires the tenant to pay maintenance, taxes, insurance and so on, along with a fixed rent. This is also called “net-net-net” or “triple net.”
Lien: a legal claim filed against a property for payment of a debt or obligation. If a property owner fails to pay a creditor, for example, the creditor can place a lien on the property. A lien can halt the sale of a property.
Sale-leaseback: a transaction in which an owner sells a property to an investor, who then leases the property back to the original owner under prearranged terms. Sale-leaseback deals offer the original owner freed-up capital and tax breaks and the investor a guaranteed return and appreciation.
Sublease: a lease given by a tenant for some or all of a rented property. For example, if a tenant rents 20,000 square feet but only ends up needing 10,000 square feet, they may want to sublet the extra space for some or all of the remaining term of the lease, providing they continue to occupy and pay rent for the property.

To learn more you need to click the link below:

http:www.cashflowcommercial.com

Terry Hale Blog » broker

10 Top Must Knows For Commercial Real Estate