Renting commercials

[eggnog]

Is it possible to employ a commercial property management company (such as CBRE) to only advertise and find a tennant for your commercial property. Then once the tenant is found you as the owner will take control from the management company for the regular management of the tennant.

I ask because I would assume that it would be very expensive to employ a management company to fully manage your commercial property but they would be handy, from their expertise and connections within the tennant pool, in finding prospective tennants.

 

[davea]

yes its possible, but they will charge higher fees....

agents usually charge ~13% of the first years rent as a location fee... on going management fees can usually be built into the properties outgoings and billed directly to the tenant. This could be something to consider (depends if its a gross or net building)

 

[eggnog]

~13% of first year rent . Is that net fees? extortion. Resi's only like the first rental payment for finding a new tenant.



Another Q i've got is, if I purchase a commercial with an already established tennant will I have to uphold the lease agreement in respect to the lease/property management relationship. ie: if the previous landlord had an agreement with CBRE to manage the property and they paid 13% will I have to stay with CBRE and continue paying 13%

 

[davea]

13% is only the tenant finding fee.... Id expect it to be much higher than resi as the leases are usually for a longer time. (ie 1 weeks rent is approx 4% of the lease which is for one year terms), if you have a 5 year term you would expect a higher amount...

under Australian Accounting standards the fee must be apportioned to each year of the lease and can not be taken in one big hit, so when you look at it on a yearly basis the fee isnt that bad....

You have to uphold the leasing agreement but not the management agreement with the established company. Depends on how much hands on work you want to do.