Hi All,
I know I'm going to get a rush of people advising me not to manage my first commercial tenancy myself, but as I'm managing serviced properties OK, involving multiple tenants, I feel confident I can do this.
It's a shop with house attached, so has residential component.Templates for residential tenancies are easily available on the net, but can't find one for a commercial tenancy.
Can anyone help? I know that it would need to be tailored to match the particular circumstances, but I'm just after something as a base to start from. I'm in SA.
thanks in anticipation,
CarlinConsidering the large amount of money usually involved in commercial properties and the fact that you don't know what goes into a commercial lease, may I suggest you get a soicitor to draft the lease – even if you manage the property yourself.
Commercial properties are valued very differently to residential proeperties and this takes into account the yield, the strength of the tenant and the security of the lease. – Don't skimp on the lease.
Retail tenancies are regulated by individual state retail tenancy legislation (this is not a commercial lease) – get your solicitor to pull out the most appropriate version (there are many). Are you getting an agent to do the initial letting? They will ensure that the offer & acceptance is compliant with the above RTA laws.
Is the house separately let from the retail?
Managing then requires specialist skills in determining what is appropriate eg type of cpi increase (eg Adelaide or Capital Cities), application of critical dates for notices (options, termination, lockout, MRR), collection/application of outgoings, application of increases in outgoings over a baseyear, collection of landtax etc.
Some of these may be applicable depending upon the deal struck with the tenant & more importantly what was contained in the offer and acceptance. All correspondence which is to be relied upon must be in writing especially the offer & the acceptance.
How is the bond to be managed? Some states now require cash bonds to be placed with the rental bond board whereas bank guarantees can still be held by the owner/agent.
How are you going to determine the appropriate rent for marketing? Is it to be a gross or net rent? Is turnover rent to apply?
You have a steep learning curve ahead of you if you are going to go it alone – do yourself a favour, engage an agent to let the property and carry out the first year's management (gee it may cost you 4-5% of the gross), learn from them, then do it yourself.
Hi Scott lotsa mates – Thanks for all that info. The house is being let with the shop. Yes, have had estimates from local property managers of expected weekly rent return. I have a copy of SA's RTA.
By "4-5% of the gross" do you mean 4-5% of the gross rental income?
I will have to check where the bond needs to be lodged.
I agree it would be better to have it professionally managed for the first year if I can find the right person.
What does MRR stand for?
Currently ploughing through "How investing in commercial real estate really works" (Roth and Lang) – a steep learning curve indeed!
thanks again, and Happy New Year!
Carlin
Sorry about that, I should have said market rent review.
PS you may be better off registering for GST even though the rent may not exceed the trigger amount but the prospective tenant may require tax invoices.
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