Being a commercial landlord

Hi all,
I am negotiating the purchase of a business. This is what I am mainly interested in. However the deal will include the existing business, building, & lot. It has 2 spaces, one w/ the business already in place, which is what I wanted, and a second vacant spot. Obviously there are many options that I can use this space for, one of which is to rent it.

I have rental house but have never been a commercial landlord, what advice & resources does anyone suggest for getting started? -Thanks

When you become a commercial landlord, you need to remember that commercial leasing takes much longer than renting an apartment or a house.

You should also know that many tenants will expect you to offer “sweeteners” like free rent, tenant improvement allowance, and the like before they agree to lease space from you.

The upside is that you’ll often capture a tenant that may stay in place for 5, 10, or even 15 years.

Be selective in what type of business you rent to and be sure to review their financials to verify that they have the resources to pay the rent.

Depending on the type business and vacant space you are about to acquire in the deal but would it be possible to expand the business to occupy all the space for the time being? Unless the size of the vacant space can be marketed properly with the right “sweeteners” as Jeremy mentioned it might take a while to lease it. A big positive of leasing an office is the long term 5+ year deal.

I would definitely like to expand into that area or even start another business of my own, but first I need to bring the existing business back from the dead so I wouldn’t be in a position to do that right away.

The good, bad & ugly of it is the vacant space is completely empty so it could be set up anyway someone would like. There is a connecting double door inside between the 2 spaces. Simple enough to cover up if necessary. The biggest obstacle is that there’s no bathroom on the vacant side. The bath in the existing business is on the common wall so I would think installing the commode would be the big issue there.

The other wrench in the system is no separate meters. Unless I just did ‘utilities included’. I’m sure there are a few other things as well.

I can foresee an issue with the empty space not having a bathroom. You will have to do something with the layout of the spaces to accommodate those facilities to the tenant. A big positive is a white shell gives the future tenant the luxury of designing it however they want with less restrictions.