Applying for a Lease

Here are some basic rules to keep in mind when applying for a lease of a commercial property.

#1.  Have a Business Plan.  This is much easier if you are buying an existing business.  If not, Be prepared to justify all the things you make up in the business plan.

#2.  Have a Credit Report Ready.  The landlord wants to know if you have a habit of making payments on time.  Because if you don’t, they’ll know that they are setting themselves up for trouble.  If you do have blemishes on your credit report, well, ask yourself why.  If the reason is good, such as lost a job or unforeseen medical bills, then write a detailed explanation and INCLUDE it with the Credit Report when submitting a package to the Landlord.  If the reason is bad, well then decide if you really should be getting into business in the first place.  Save yourself, your landlord and other creditors the headache and get a job.

#3.  Prepare a financial statement.  This is a form with which you can show all of your assets and liabilities.  Hopefully, the assets outweigh the liabilities.  Make sure to include the Current Fair Market Value of Assets, so the Net Worth (Total Asset Value minus the Total Liabilities) is an accurate figure.

#4.  Fill out the Landlord’s application clearly.  Don’t leave things blank, it is a bad sign.  If you want to protect your Social Security Number, that is fine, just make sure to include a note that you are concerned about your identity and credit.

#5.  Read the old or current lease in place to get an idea of the what Terms the Landlord is enjoying now.  Use them as a base to begin to negotiate your terms.  Have a firm proposal in mind, including the base rate, NNN or Gross Lease, CAM caps if applicable, indexing schedule, Options desired, etc.    Make that proposal clear and IN WRITING.

#6.  Be prepared for slow negotiations, Landlords know that you are typically in a greater rush than them, so make sure to start negotiating as early as possible and be direct and PROMPT in your replies to keep from wasting time and dragging out the negotiations.

For More information on how Just Elementary, Inc, Business Brokers can help you with Negotiating Your Retail Commercial Lease for your business contact our Client Care Manager Sonia Chhabra at  (888) 926-9193 or email cs@justelementary.com