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EP. 1416 THE BIGGEST MISTAKE WHEN NEGOTIATING A COMMERCIAL LEASE!
Manage episode 482150493 series 3445143
Content provided by Mark Novak, Lisa Novak, Billy Drury, Branka Stankovic, Stevan Bubalo, Cleo Whithear, Bidhan Shrestha, Josh Wapshott and guests, Mark Novak, Lisa Novak, Billy Drury, Branka Stankovic, Stevan Bubalo, Cleo Whithear, Bidhan Shrestha, and Josh Wapshott. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Mark Novak, Lisa Novak, Billy Drury, Branka Stankovic, Stevan Bubalo, Cleo Whithear, Bidhan Shrestha, Josh Wapshott and guests, Mark Novak, Lisa Novak, Billy Drury, Branka Stankovic, Stevan Bubalo, Cleo Whithear, Bidhan Shrestha, and Josh Wapshott or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://ppacc.player.fm/legal.
Negotiating commercial leases is a high-stakes game where seemingly small details can snowball into massive financial consequences. This episode peels back the curtain on the critical elements that make or break lease agreements for both landlords and tenants.
We start by tackling the fundamental question of who pays for lease preparation - revealing how retail and commercial standards differ and how the typical $2,000 cost is increasingly being split 50/50 between parties. But this is just scratching the surface. The real financial landmines lie hidden in the fine print that many skip over.
For landlords, we expose how extended option periods with pre-programmed low rent increases can trap you in financially unsustainable arrangements for years. Even more surprising? These option periods that significantly limit your flexibility don't even enhance your property's value with lenders. We share startling examples of landlords who've signed away their financial futures with poorly structured 12+ year leases, and explain why COVID-era concessions should have been strictly time-limited.
Tenants face their own set of pitfalls. We break down how experienced landlords leverage the magic of compounding through seemingly small rent increase percentages, and why property condition clauses that nobody reads can result in shocking $50,000+ bills when it's time to vacate. The notorious "make good" clause alone has bankrupted businesses who failed to understand their obligations.
Perhaps most problematic is the deceptively simple term "outgoings" - a chameleon-like word that can encompass vastly different cost obligations depending on how it's defined. Is it just council rates and strata fees, or does it include land tax, agent fees, building insurance and maintenance? Without specificity, this single term can lead to bitter disputes and unexpected expenses.
Whether you're a seasoned property investor or signing your first commercial lease, this episode delivers practical wisdom to protect your interests. Have questions about your specific lease situation? We're offering free advice even if you're not in our service area - just reach out and mention this episode!
Chapters
1. Who Pays for the Lease? (00:00:00)
2. Common Landlord Mistakes (00:02:04)
3. Option Periods and Rent Increases (00:05:36)
4. Defining Outgoings in Leases (00:08:44)
5. Tenant Mistakes to Avoid (00:10:20)
6. Make Good Clauses and Final Advice (00:13:00)
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