A Guide to Buying and Leasing for Small Business: Q&A with Ron Platt
Ron Platt has been in the real estate business for over 20 years. After opening two Keller Williams Realty offices in Miami, Florida, Ron expanded. He is now the CEO and owner of The PLATTinum Team, which consists of several real estate agents spread throughout Miami and St. Petersburg. We recently sat down with Ron to address some frequently asked questions regarding buying and leasing property from the small business perspective.
Leasing May Be the Best Option for Your Small Business Right Now
LL: Should I buy or lease a property for my small business?
RP: Most of my clients are leasing right now. However, this is not because they necessarily want to lease, but rather, there is a lack of retail and commercial space to purchase as far as offices are concerned. There is also a tremendous lack of inventory on the purchasing side as far as offices, warehouses, retail, and commercial buildings. The market is so hot right now that when these buildings do come up, they are way overpriced.
LL: What should I keep in mind when negotiating a lease for my small business?
RP: You should know that there are two different kinds of leases; a gross lease and a triple net lease. A gross lease is a lease that includes rent and any incidental charges incurred by the tenant. A triple net lease, on the other hand, requires that the tenant pay maintenance charges, property taxes, and insurance in addition to rent. The type of lease is determined by the landlord. So, when you are leasing a commercial space, figure out whether you’re going to be paying a gross lease or a triple net lease.
LL: How does the lease approval process work?
RP: Once you find a space, the landlord will ask to see your profits and losses statements, along with your financials from the last two to three years. They want to know that your profit and loss can withstand the rent you are paying. They will also ask about the history of your business. Are you a startup or an established business? This may affect your chances of approval.
LL: When applying for a lease, what are some things that my small business could get denied for?
RP: It really comes down to your financial statements and business history. Poor credit, a lack of financials, and a lack of experience as far as how long you have been in business are all things that could get you denied for a commercial property. A lot of startups, for example, have a harder time leasing space because they have a lack of experience in the business. That is why you see so many coworking spaces right now, because they don’t care about financials or business history. Rather, they are structured using month to month leases, so if you don’t make your payment, you’re out. It’s that simple.
LL: What should I be thinking about when buying a property for my small business?
RP: If you plan to buy a property, think about what type of loan you will get. For example, are you going to get a SBA loan or a regular commercial loan? You should also be thinking about the requirements of the loan and whether your small business meets them. This typically comes down to the financial stability of your company, how long you’ve been in business, who is running your business, and what kind of experience they have. The loan company will also want to know what kind of building you plan on purchasing and if you have experience owning your own building. This may influence your chances of meeting certain loan requirements.
LL: What other pieces of advice do you have for small business owners who are trying to buy a property?
RP: Make sure that you are working with the right commercial agent. Unfortunately, there a lot of people in the business who don’t know what they’re doing. A good agent should know every aspect of the purchase contract every time they do a commercial deal. Also, make sure that you are represented by an attorney. It is a different animal purchasing property on the commercial side than on the residential side due to all the various factors involved.
Lonzo Law provides counsel for every phase of your business. To learn how we can support you in the buying or leasing process, give us a call at (727) 537-0209 or contact us online.