im considering purchasing my 1st commericial retail property - any advice you can offer on being a landlord?

approx. 1700 sqft.
(e.g. What if the tenant wants to renovate for their business - who pays?; When their lease is up do they bring the property back to the shape I gave it to them in, or do their renovations stay as is?; If the tenant is a restaurant or bar, do I as the owner of the property need to confirm they have a liquor license, food service permits, other local permits?; Other critical information I should consider? - any advice/info helps - I am a landlord for residential properties and this would be my first exposure to the commercial realm.
In Buying Property - Asked by Vik B. - Apr 20, 2016
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Answer(s)

Robert M.
Broker/Agent
Cincinnati, OH

TI, (Tenant improvement)Is negotiable and off course, the longer the lease renew for and the amount, the more money can be allocated to make the tenant happy. Renovations stay with the property no matter who paid for improvements. You are not responsible for their licenses but I would check to see if they have one or would structure an escrow if you are doing TI in the event the license is not issued and the who deal blows up and you are out thousands of dollars. With a bar, check the background of the operator carefully. He could bring an undesirable element to your property which will hurt the marketability of your property.

Apr 21, 2016
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Todd M.
Owner/Investor
Huntington, NY

If you are considering purchasing this property really focus on the expenses and projected income. Do extensive research about the building, the area, the uses, the local zoning laws, property taxes, demographics and vacancy rates in the area. Buy the building like you are going to occupy it.

Apr 21, 2016
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Vik B.
Owner/Investor
Chicago, IL

Very helpful info - thank you!

Apr 22, 2016
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Mike Y.
Broker/Agent
Dawsonville, GA

Great answers above!
In addition, read your leases and be aware of all the consequences, good or bad of each lease. Everything is negotiable in real estate and chances are, unless you are an institutional Landlord, every lease will be different. Know what you are responsible for and what the Tenant is responsible for WHEN a problem arises. A property may have a nice cap rate and good cash on cash but a major repair can really hurt your losses.
Consult with your CPA and ask about cost segregation if major repairs, there may be an opportunity to lower your tax liability.
Review your tenant mix and obtain multiple bids for contracted services to increase your IRR.
Happy Landlording!
-Mike Young
myoung@nortoncommercial.com

Apr 22, 2016
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Guy M.
Broker/Agent
Spring Valley, CA

Another thing, if the property is in a location for a possible governmental or public tenant, then it has to be ADA compliant/certified. You need to make sure to include this cost when you make the offer. It could be very costly.

May 13, 2016
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