You can tell a newcomer to the business world (or someone without much experience) by the way they start investing in new equipment heedlessly. A veteran (or someone who has a much more experienced business person to guide him) would know that there are times when you can resort to Business Equipment Leasing instead to save on money that could go further when spent on other needs of the business instead.

Business Equipment Leasing is like other forms of equipment leasing in that you lease your equipment from the owner (or lessor) in exchange for paying for them during the time you are leasing the equipment. You, the person borrowing the equipment, are the lessee. One common type of Business Equipment Leasing is called Office Equipment Leasing. The good point about Business Equipment Leasing is that it allows you to use the business equipment for the term of the lease, then use any money you have at the end of the lease to either lease more up to date business equipment or buy your own business equipment outright. Business Equipment Leasing is often much cheaper than renting equipment. In Business Equipment Leasing, the arrangements you make with the owner could also include an option to buy the equipment you are leasing once the terms of your lease are up.

To pursue Business Equipment Leasing, you might want to use the services of a Business Equipment Leasing broker. This Business Equipment Leasing broker is responsible for submitting and monitoring the submission of your requests for Business Equipment Leasing to lenders like banks. It is not the Business Equipment Leasing broker who will provide funding – he simply acts as a middleman. If you have time on your hands and would like to save money, then you can bypass the Business Equipment Leasing broker altogether and head for the Independent Lessor instead.

An Independent Lessor would be the diversified financial company that provides Business Equipment Leasing straight to business owners like you. Examples of such diversified financial companies are banks as well as Business Equipment Leasing specialists. Many times, since small business owners are already well connected with banks, these are the companies that act as Independent Lessors to small businesses that need Business Equipment Leasing or that the small business owners turn to first.

If you are not interested in buying the equipment you lease after the term of the lease has been completed, then always opt for a short-term lease at the onset. Sometimes this is good because some business equipment (particularly computers) become obsolete fairly quickly so you don’t want to be saddled with this old equipment which you will find useless soon after. If you can get a lender that offers Business Equipment Leasing with an upgrade stipulation built into the contract that would benefit you because it means the cost of an upgrade has been factored in. Your old equipment gets an upgrade and business continues for you and your lessor after the upgrade has been implemented. Everyone wins.



Quick Property Sale

Last week we looked at a few of the things you should consider before leasing that first office or storefront for your business. To recap, you should not only consider the old standard “location, location, location,” but also consider things like sufficient parking, the number of employees who will be working onsite, and future growth projections. I stressed that it was important not to get caught up in the moment. You should take your time to find the space best suited for your business for the long haul, not just for today.

This week we’ll discuss the most important aspect of the process: signing a commercial lease (insert dramatic music here). One of the biggest mistakes many entrepreneurs make when leasing commercial space is not reading the lease. Forget reading the fine print. When it comes to a lease its ALL fine print.

Don’t believe me? Let me tell you the true story of my friend, Homer, whose name I have changed to protect the ignorant. Homer signed a two year lease on a suite of offices for his business. As the owner of the business Homer signed on the dotted line and agreed to personally guarantee payment of the lease and to abide by its terms. Homer moved in and it was business as usual until the end of the two year lease term drew near. It was then that Homer discovered that failing to read the lease was going to be a very costly mistake.

Toward the end of the two year lease period Homer decided to relocate, but when he gave the landlord what he thought was the customary 30 day notice, he discovered that the lease had automatically renewed for another two year term at the 60 day notice point. In other words, Homer didn’t realize that the lease required a minimum of 60 days notice to let the landlord know that the lease would not be renewed. Because Homer did not know that he was required to give at least 60 days notice of his intent to vacate, the lease automatically renewed for another two years. And there was not a darn thing Homer could do about it but reach around and slap himself in the back of the head for not taking the time to read the lease.

What was the landlord’s position when Homer pointed out that he had not read the lease and therefore was not aware of the 60 day notice? The landlord, while sympathetic to Homer’s plight, stuck to his guns and told Homer that he would have to honor the lease, which meant that even if Homer moved out as planned, he was still on the hook for paying the rent for another two years.

Does the fact that the landlord chose to enforce the lease agreement rather than let Homer off the hook make him an evil man? Not at all. From the landlord’s point of view, he had no choice but to enforce the terms on the lease. He had a signed contract that told him his space was going to be rented for the next two years. He had not planned on the space suddenly being vacant. Being a landlord with unrented space is like being a business with no paying customers. Empty space means no revenue from rental fees which means no money to pay the mortgage payment.

As the old saying goes, “It’s just business…”

Sure, any landlord with a heart might feel bad that Homer was ignorant of the auto-renewal clause, but not so bad that they are willing to risk their own financial well-being by having Homer’s space sit vacant. The bottom line is this: whether Homer read the lease or not is irrelevant. Homer signed the lease, thereby agreeing to its terms, and therefore he must hold up his end of the bargain, period.

As of this moment, Homer is relocating his business in spite of not being able to get out of his old lease and he will continue paying the payment on the vacated space for the remaining two year term of the lease or until he can sublease the space. Even then Homer is not fully off the hook because he will still be considered the legal tenant unless his sublessor agrees to sign a new lease with the landlord. Hopefully he will just have someone else making the lease payments.

Again, the moral to this story is READ THE LEASE. Or even better, have an attorney read it for you. I have learned over the years to never sign a legal document of any kind without letting my attorney review it, especially if the document involves money and my first born child.

Here are a few other points to ponder before signing a commercial lease.

How is the lease payment calculated? The most basic equation for calculating a lease payment takes the number of square feet times the cost per square foot, then amortizes that over a 12 month span.

For example, if you have 1,000 square feet and the cost per square foot is $12, the annual lease payment would be $12,000. Divided by 12 months the monthly lease payment would be $1,000. Again, this is a simplified scenario. These days most commercial leases include additional factors that affect the final price, such as rent increases, operating expense escalations, common area charges, etc.

Who pays for what? It’s important that you understand exactly what you are paying for. Are you responsible for any costs other than the rent? Will you be responsible for paying your own utilities, for example? Will you have to pay for parking privileges or janitorial service? Who handles maintenance and repairs?

Is there an escalation clause? It is typical that the lease contain what’s known as an escalation clause that allows the landlord to pass on increased building operating expenses to the tenants. If your lease contains such a clause you should ask for a cap on the amount the lease payment may rise over a given period of time. And if the escalation clause is ever activated by the landlord you are well within your rights to ask for an itemized accounting of the expenses that are being considered as cause for your raise in rent.

What rent increases might there be? One very important factor to know is this: if you do renew the lease how much can the landlord go up on the rent? It is expected that rents will increase as property values increase. If your landlord can rent the space for more than you agreed to pay a year ago, he is within his rights to ask for the increase. However, it would be a nightmare if your rent suddenly doubled overnight. Negotiate the increase before you sign the lease. Most rent increases are calculated by percentage, not by flat rates.

Renewals and terminations. Most leases require that you give a minimum of 60 days notice if you intend to terminate the lease and vacate the property. As Homer learned, many leases also renew automatically for another term unless you give notice within 60 days of expiration. Know when your lease expires and the time required to give notice.

Is a personal guarantee required? What happens if your business goes south and can no longer afford to make the lease payment? Are you then responsible for paying the rent out of your own pocket? Probably so. Most landlords insist on a personal guarantee from the owner or an officer of the business. This means that even if you go out of business you are still personally on the hook for the remainder of the lease.

Finally, clarify all points. You should be clear on every point in the lease. And if you are not, ask for clarification.

Exactly what space are you leasing? Who is responsible for repairs? What common areas will you have access to? Who is responsible for maintaining the little things, like keeping the shared estrooms stocked with soap, towels, and most importantly, toilet paper.

A small detail to consider now, but not when you suddenly find yourself without such amenities at the wrong time.

Here’s to your success!

Tim Knox tim@dropshipwholesale.net For information on starting your own online or eBay business, visit http://www.dropshipwholesale.net



Real Estate Professionals

In these economic times, it seems as if decisions about leasing or purchasing commercial property for business use would be chancy or risky at best. Yet, there are abundance opportunities nationwide for gaining amazing areas and deals for office space to rent or lease. Throughout the Northeastern United States in such place like New Jersey and Minnesota, commercial property opportunities abound.

A mere few hours from Manhattan, New Jersey boasts a multitude of pluses to attract new business. High-tech, pharmaceutical and research companies are plentiful throughout a state that can still lay claim to pristine wilderness that’s just outside urban settings with historic universities such as Princeton and Rutgers a mere stone’s throw away. Locations throughout the state are easily accessible to the excitement and speed of New York making New Jersey even more attractive to working populations with its more affordable housing and good schools than its more glamorous neighbor.

Minnesota exists as more than just the twin cites of Minneapolis and St. Paul. Within the state, there has been continued strong job growth that bucks national trends. The twin cities area plus its suburbs are attracting young and vibrant companies that have increased the prestige of the entire state. Coupled with affordable housing and good schools, Minnesota’s business development is expected to grow throughout the year.

As cheerful, wide and sweeping as its unofficial state song ‘The yellow rose of Texas’ attests, Texas has seen great economic growth with the entry of high tech firms such as Dell and IBM creating an atmosphere of affordable housing and good schools whose high graduation rates guarantee important future positive returns on business development and creation.

Boasting a mid tempered climate, Texas also has abundance nightlife, affordable housing, rich cultural history all within a state that is as grand and wide as a Texas smile.

With a growing Bioscience industry and a landscape that includes truly spectacular scenery, Colorado is a cutting edge location for office space rentals. High tech industries such as Hewlett-Packard, Agilent Tech paired with firms like Kodax make the rocky mountain state attractive to potential employees. Green technology and business is set to grow within the state due to Colorado’s recent Federal contract for their Solar energy project make the area even more appealing to new business. Colorado has a graduation rate above the national average creating a knowledgeable pool of potential employees.

Virginia boast abundance amenities within its spacious green land, great schools, a youthful population and high college graduation rate coupled with low affordable housing makes the Virginia area attractive in creating new business. Strong opportunities in Medical care partnered with good racial diversity make the state a strong draw for people of all ages and races. Abundance wide open spaces are ripe for potential business development as well.

These states are well timed to lead in commercial property development within the new year. They are areas that will increase in prestige and business development creating jobs while providing a high standard of living for several years to come.



Quick Property Sale

Triple net leases are becoming more popular in the Houston area. Here, they are obviously less expensive for the property owner, and can allow a truly passive form of income for the property owner. With one of Houston’s triple net leases, a property owner can be hands off, which is exactly what more and more property owners are looking for. Of course, there are down sides to them as well.

Most triple net leases give control of the property to the lessee, which can be either a good deal or a bad deal, depending on who the property owner is dealing with. They provision the renter to pay for maintenance as well as other costs associated to property ownership.

Before ever purchasing one, potential owners should have these leases looked over by a Houston real estate attorney to be assured that the property owner can still control structural changes to the property as well as enforce the general maintenance that the property requires.

While a property owner can simply go online and download a lease agreement, these leases in particular can work against the owner of the property. Legally speaking, it is very difficult for a property owner to deny liability for destruction of property, especially if they are being held accountable by a third party. A well written, clear and concise lease can help avert such situations.

Every triple net lease property for sale in Houston is going to vary at least in structural repair requirements. Many of them require the tenant to pay for everything except roof repairs while some require everything including roof repairs. A bond clause requires the tenant to pay for the property even if the property doesn’t exist anymore, such as the loss resulting from fire, flood, earthquake, or other natural disasters.

Triple net leases are a hard sell for potential tenants, regardless of whether you are referring to residential tenants or commercial tenants, and there has to be a motivation for the tenant. There is an exceptional amount of negotiation associated with them, and potential purchasers should yield to caution when entering a pre-existing lease.

Leases for sale with huge profit potential can be difficult to find. They take a bit of cultivation, and a bit of finessing to create the perfect situation. If the tenant of a triple net lease is not worthy of the sale, the sale will often never materialize.

Both the landlord and the tenant can benefit from a triple net lease and can experience great frustration from them too. Keeping in mind that the tenant who agrees to one needs to get something out of it, purchase of a triple net lease in Houston can lead to more pitfalls than necessary if the situation hasn’t been scrutinized.

In most cases, residential leases in Texas are rare. It costs too much money. The only notable exception to that rule refers to some apartment buildings, usually units that house between 6 and 12 units. These can be an acceptable alternative to home ownership under the right circumstances. The vast majority of triple net properties in the area are commercial properties.

Finding an ideal triple net lease for sale in Houston or the surrounding area can be considered an impossible task. Because they are unique between landlord and tenant, most ideal situations are created rather than purchased. Those leases which are up for sale are often good situations, but a potential owner is hard pressed to find a perfectly ideal situation unless they have created it for themselves.

Creating one and then selling it can be ideal for those looking for a high end real estate business. Some of these leases are signed for as long as 50 years, offering up some very tempting terms for a potential buyer. After all, provided that the lease is signed for an extended period of time, the lease can provide a significant income-expense ratio for the owner. Additionally, the resale of one can also bring in revenue.

Anyone considering purchasing a triple net lease for sale in Houston should never consider the purchase without the assistance of an attorney for the simple reason that these leases are personalized per situation.

A great find will still be a great find after a lawyer looks over the lease. A good find can turn into a great find after an attorney evaluates the lease. Then of course, a lawyer can save you much headache and pain when it comes to a triple net lease that shouldn’t be touched with a single dollar.



Sell and Rent Back