How to properly lease you’re newly purchased commercial investment? The million dollar question that most inexperienced investors have once they have decided to take the plunge. Once they have taken the plunge? Would it not be more prudent to ask this question prior to purchasing a commercial property in this hot but unstable leasing Toronto Real Estate market? Oh my, what a pity. To their defense, most investors today regardless of their level of experience believe that the market is so hot that anyone could buy Real Estate and not suffer any consequences, what they fail to understand that commercial property is not anything like a residential investment. They are very different, commercial properties demand more strategy and attention to detail in order to achieve long term success! Please don’t misunderstand my point, residential investments require attention as well , it’s just commercial investments require a vision from the start. A home is a home but a commercial property could be a doctor’s office one day and then be converted to a photographer’s studio the next.
Having a vision for how this building will maximize its potential for long term gains is key, also its important to note that the turnover is not high with tenants yet finding the right leasee could be a challenge rather than an adventure. Allow me to ask a question, in your opinion what is the landlord’s greatest demand from a tenant? It’s simple; the landlord’s greatest demand is that their tenants are financially successful in their venture! All sophisticated commercial investor that stands apart from their counterparts will tell you same. Successful landlords have a unique thought process that separates them from the rest.
From the get go if you will, methodical thinking is taking place from the start even before actually buying the property. Here are some examples; zoning (different types of property use)? Future re-development? Will this property demand a triple a tenant? Is this an anchor type of location? Or is it a over flow location? ROI and payback period on the initial investment? The cost of capital? These are just some of the questions that prudent investors ask prior to deciding in buying or passing up the opportunity that has been presented.
Are you aware that most commercial properties that are marketed for sale in the Toronto Real Estate market are never published on the local MLS system? It’s true, a very small group of Realtors only co operate amongst themselves and most all commercial Realtors have the relationships with the corporate leasing managers. As an investor it’s just as important in having these relationships in your inner circle of business contacts.
Also, the greatest requirement from the property owner is that a landlord’s lease is signed by the tenant; this type of lease is a priority not only to protect the interests of the building but also to protect tenants from themselves. Here is a tiny example of this, the lease will specify the hours of operation that the business must serve to its potential clients, why? Well if a business closes prior to its competitors then the tenant is not achieving the success it requires to, which in turn may not provide the long term success for both the business owner (tenant) and the property owner (landlord). It’s simply genius on the landlord’s part. The moral of this article is that investors research not only the opportunity but also surround themselves with outstanding people that have great expertise.
Remember that mostly all successful people have great teams working on their behalf in the background. Not all Realtors just like investors are created equal!