Does your would-be commercial landlord seem untrustworthy to you?
Perhaps they seem too eager to please, or in a rush to sign the papers. Maybe they’re being vague about something. Maybe you simply feel like they’re misrepresenting the space.
To ensure you’re getting a fair shake, we have decoded some of the things that an untrustworthy landlord may say, and we will let you know what they’re actually saying.
“If You Hire An Agent, I Will Have To Add Their Commission To Your Rent”
This appears to be in your best interest. This building owner wants to offer you the lowest possible price and having to add an agent or broker’s commission fees into the mix would get in the way of that, right? Wrong.
The building owner is acting completely in their own interest. The reality is that if they raise the rent for any single unit in their building, the value of the entire building actually increases.
Their attempt to keep you away from an agent or broker is more likely about trying to keep you from something they don’t want you to know. This detail may be a red flag in the eyes of any number of commercial lease experts and they would probably advise you to walk away.
Maybe the building manager doesn’t want you to see that there are currently better options on the market. Or maybe they want to put something less-than-fair for you in the lease.
“If You Want to Pay Cash, I Can Give You a Discount”
This is another red flag that often points to them trying to conceal something. Maybe they’re avoiding a paper trail because the building’s wiring isn’t up to code and it will cost them thousands to correct it.
Rather than go through official channels with a paper trail, they will try to strike up a cash arrangement and try to present it as something in your best interest.
It is not.
Any Combination of “Triple Net Lease” or “NNN”
You may also be tempted to take a price break on a commercial property after being offered a triple net lease (Net Net Net or NNN). This means you are basically taking on all of the fees (taxes, utilities) and maintenance (repairs, upkeep) for the duration of your lease.
This lease is, in most cases, only a good idea in two situations:
- You plan to stay in this space for at least 10-15 years
- You’re comfortable with the building upkeep being performed by yourself or your staff. Or you can pay someone to do it, without completely negating the cost-savings from the NNN lease.
It can be easy to snap up the less expensive lease and assume you will be OK, “As long as nothing happens.” But, you can bank on the fact that something will happen. You might as well own the building, in many cases.
If a lease seems too good to be true, it probably is. If you seem poised to get the deal of the century, ask yourself why you’re getting such a good break.
The human reaction is to snap up these offers before anyone else is privy to them. However, always take the time to do your own due diligence, even if you’re feeling pressure from the property owner/ manager to act now. Their eagerness could be a red flag.