what is considered a fair security deposit in terms of months for a small fast food rest with average credit

In Leasing Property - Asked by mike f. - Apr 25, 2011
Report Abuse
Answer this Question

Answer(s)

Rob B.
Chandler, AZ

Mike....
Without a personal guarantee, backed by solid assets, I would require a security deposit equal to three months. As we in leasing know the restaurant business is loaded with failure! We all want success from these small business operators, but unfortunately the mortality rate is high.
Onward and upward Mike... Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Apr 25, 2011
Report Abuse
Chris R.
Broker/Agent
Denton, TX

More the better - negotiating a deal right now in DFW - asking for 1st / last and a security deposit of one month's rent. That = 3 full months at lease execution. So many factors to consider. Certainly must have input from the owner. How long has the property been available? How much activity (or not) have you had? Competition? Experience of the prospective tenant? Track Record?

Apr 25, 2011
Report Abuse
Mari R.
Listing Administrator
Naperville, IL

Do you mean avearge credit as a business or personal? If you have run DnB report and the company's credit is average but his personal credit is good i would strongly suggest to get a personal guarantee for the lease and use your regular deposit rule of first and last month or one gross month whatever you find standard in your market area. If the client does not want to back up his own business with a personal guarantee then it most likely mean that they do not have a very stable business and if so i would ask from 4-6 months as a deposit depending on how badly you want to lease the space, how much you are investing into the lease (free rent, commisions, constructions, etc) to make sure that you are covered for a good portion of your initial investment. If you are giving some free rent up front i would change the deal to spread the free rent during the lease term like towards the end of each year so that he/she has something to look forward to.

Apr 25, 2011
Report Abuse

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question