How Does Signing a Longer Lease Help in CRE Investment

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How Does Signing a Longer Lease Help in CRE
Investment
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When you are ready to lease commercial space,
then it is also needed to be aware of every
detail about the lease agreements.
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The commercial leases are different from the
residential leases and to have a successful
negotiation, you must do your research before
approaching the owner of the commercial real
estate.
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Usually, a commercial lease term tends to be
longer than the residential lease period,
averaging at about 3-4 years.
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Why should you sign a longer commercial lease?
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Leasing commercial real estate is an important
decision that can dramatically affect the success
of your business.
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There are many factors that tenants must
carefully consider prior to signing the lease
agreement and one of those considerations is
whether to sign a long or short term lease.
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Longer-term leases are binding and you cannot
easily break or change a commercial lease
agreement.
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Flexibility
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The commercial leases are subject to a lot of
negotiation between the tenant and the property
owner.
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Most often there is a need for special features
in the commercial spaces for a particular
business and the landlords are always willing to
extend special offers for their longer-term
tenants.
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A long-term strategy that consists of properly
structured long-term leases can be beneficial.
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Stability
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When you sign a longer lease, then there is more
stability for the individual business or company
and also for the commercial real estate property
owner.
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For long-term rentals investors, the goal of
positive cash flow can be easily achieved.
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And in case, you are a month to month tenant in
a busy commercial real estate market, then you
are at risk as the property owners always look
for long-term tenants.
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No relocation
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It is always an advantage to have a longer lease
in place as it helps you avoid the time, revenue
and inconvenience of frequent changing of your
business place.
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It is an important point to remember that the
bigger your company or business gets, it becomes
more expensive and time-consuming to relocate.
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Its easy for a startup to move around the first
couple of years, but when the employee strength
keeps on increasing, then it becomes very
difficult to relocate to a new commercial real
estate property.
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Conclusion
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Understanding of the term of the lease dictates
when the business can take the space so that it
can start advertising its new location to
customers.
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The commercial property owners often prefer to
have longer lease terms because this provides
greater financial security if they know someone
will be occupying the building.
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