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How To Keep Your Dream Of Leasing A Commercial Property From Becoming A Nightmare

by Fernando Moore

Many people dream of being their own boss. Some business owners will start out in their homes and eventually move into larger commercial properties as their businesses grow. But leasing a commercial property can lead to a nightmare if you aren't careful. If you are ready to move your home based business to a commercial property, here are a few important things to consider so your dream doesn't turn into a nightmare. 

Will you be responsible for capital expenditures? 

It's important to read the lease agreement very carefully, especially when it comes to items such as the costs of maintaining, repairing, and/or replacing things like the roofing, foundation, HVAC systems, plumbing, and other mechanical components of the property you are leasing. Be careful to not sign a lease agreement that shifts all of the responsibilities, especially financial, solely to you. If you find this in the lease agreement, you may need to negotiate.

For example, perhaps you are willing to pay for maintenance and repairs but do not want to pay for replacements. The major thing to factor into the equation here is whether or not you can afford those costs, whether through your business or through your personal finances. Therefore, before you sign the lease, you'll need to find out what those costs would be so you'll have a better grasp of what you may face in the future. 

Will you be required to sign a personal guarantee? 

As a business owner, you know that the risks of remaining in business through the term of the lease are stacked against you, especially if your profits rely on the local economy and it's not doing too well. For this reason and others, you may be asked to sign a personal guarantee at the time of your lease signing. This is a document that states that you will be personally required to pay the rent if your business is unable to pay, for whatever reason. 

Fortunately, there is a little room for negotiating when it comes to signing a personal guarantee. Perhaps you can negotiate for a shorter term or a lower rent amount should the personal guarantee kick in. One thing you must do is to get what is called a pro forma copy of the lease. This is basically an informal copy of the lease. It should list everything that will be in the lease but in layman's terms and in an easy-to-find layout, especially regarding personal guarantees and capital expenditures. For more information, go to site.