from Twitter https://twitter.com/AustinTenantAdv via Blogger Charles G. Hanna thanks for following me on Twitter! https://t.co/n3QcAZL2qq
0 Comments
from Twitter https://twitter.com/AustinTenantAdv via Blogger GigiTrendz thanks for following me on Twitter! https://t.co/Vkm0XGuFB4
from Twitter https://twitter.com/AustinTenantAdv via Blogger Kantar Worldpanel thanks for following me on Twitter! https://t.co/YgdP1aOWYr
from Twitter https://twitter.com/AustinTenantAdv via Blogger Bill M Moore thanks for following me on Twitter! https://t.co/OL8UvJjZzn
from Twitter https://twitter.com/AustinTenantAdv via Blogger IMMIX Productions, Inc. thanks for following me on Twitter! https://t.co/pXVo6P0YdJ
from Twitter https://twitter.com/AustinTenantAdv via Blogger ModoBuddy thanks for following me on Twitter! https://t.co/5LI86J0v1L A letter of credit (LOC) is a document that guarantees rent payments up to a negotiated amount to a landlord in the event you (tenant) do not pay your commercial lease payments. It’s typically used in lieu of cash for the security deposit required when renting commercial real estate. Rather than write a check for the security deposit the bank issues a letter to the landlord guaranteeing them rent payments in the event you do not pay your rent. You may also here banks refer to them as a standby letter of credit or irrevocable letter of credit. These are pretty common when negotiating commercial property for lease in Austin Tx and I imagine they are in other markets as well. Why Use a Letter of Credit Rather than a Security Deposit?Some businesses would rather use their cash to grow their business rather than have it sit in the landlords bank account. For example maybe you need to buy a piece of equipment that can help you make extra money which justifies the cost of the letter of credit. Also, if you are a startup with no track record or the landlord thinks you don’t have strong financials and pose a risk they may ask you for a security deposit that is more than one months gross rent. In some cases they may ask for 2-6 months of gross rent as a security deposit. Depending on the size of your space and rental rate this can amount to a lot of up front cash. How Does a Letter of Credit Work?To get qualified for one you will need to have a relationship with a bank. They may ask you to have a certain amount of cash in the bank or post some collateral (e.g. home mortgage) in order for the bank to qualify you. They will have you fill out some paper work that includes the landlords banks info, etc. Then once qualified they will send the landlord a letter giving them the ability to withdrawal payments in the event you do not pay rent. Now the landlord will have to meet certain conditions. Banks won’t just let them take out money whenever they want. The only time a landlord can request money is if you don’t pay rent. If you never default on your lease then nothing ever happens. When negotiating the letter of credit you want to make sure that the landlord will be required to show the bank proof that you have not paid rent. How Much Does a Letter of Credit Cost?A letter of credit is not free. Banks will charge some sort of fee which is tied to the credit amount. Think of it as kind of a bank loan that never gets used, unless you default on rent payments. Ask your bank for details however in most cases the management of a letter of credit might cost a few hundred dollars per year. Then if you default on rent payments and the landlord withdrawals money you will be charged interest on that amount. Interest is NOT charged on any money unless it’s withdrawn by the landlord. Disadvantages of Using a Letter of Credit
Types of Letter of CreditThere are many types of letter of credit and the use of each depends on the bank, credit worthiness of person leasing or buying, and the landlord or sell. The most common will be irrevocable. Letters of credit can be used if buying commercial property or leasing commercial property. Irrevocable Letter of Credit – Cannot be modified or cancelled without agreement of all parties Revocable Letter of Credit – Can be modified or cancelled by the bank at any time and for any reason. Stand-by Letter of Credit – Bank assurance that a person leasing commercial space is able to pay the landlord. The landlord does not expect to have to make any withdrawals. Letter of Credit SampleBelow is an example of a letter of credit that was used on a 90,000 sf office lease in Austin, Tx A letter of credit is a great tool to use if you can as it helps keep your cash freed up for business expenses. Make sure to carefully negotiate the conditions that a landlord must meet before they can make a draw. You want proof that the money is due and owed as well as advance written notice of landlord’s intent to draw.
via Blogger What is a Letter of Credit When Renting Commercial Property? A letter of credit (LOC) is a document that guarantees rent payments up to a negotiated amount to a landlord in the event you (tenant) do not pay your commercial lease payments. It’s typically used in lieu of cash for the security deposit required when renting commercial real estate. Rather than write a check for the security deposit the bank issues a letter to the landlord guaranteeing them rent payments in the event you do not pay your rent. You may also here banks refer to them as a standby letter of credit or irrevocable letter of credit. These are pretty common when negotiating commercial property for lease in Austin Tx and I imagine they are in other markets as well. Why Use a Letter of Credit Rather than a Security Deposit?Some businesses would rather use their cash to grow their business rather than have it sit in the landlords bank account. For example maybe you need to buy a piece of equipment that can help you make extra money which justifies the cost of the letter of credit. Also, if you are a startup with no track record or the landlord thinks you don’t have strong financials and pose a risk they may ask you for a security deposit that is more than one months gross rent. In some cases they may ask for 2-6 months of gross rent as a security deposit. Depending on the size of your space and rental rate this can amount to a lot of up front cash. How Does a Letter of Credit Work?To get qualified for one you will need to have a relationship with a bank. They may ask you to have a certain amount of cash in the bank or post some collateral (e.g. home mortgage) in order for the bank to qualify you. They will have you fill out some paper work that includes the landlords banks info, etc. Then once qualified they will send the landlord a letter giving them the ability to withdrawal payments in the event you do not pay rent. Now the landlord will have to meet certain conditions. Banks won’t just let them take out money whenever they want. The only time a landlord can request money is if you don’t pay rent. If you never default on your lease then nothing ever happens. When negotiating the letter of credit you want to make sure that the landlord will be required to show the bank proof that you have not paid rent. How Much Does a Letter of Credit Cost?A letter of credit is not free. Banks will charge some sort of fee which is tied to the credit amount. Think of it as kind of a bank loan that never gets used, unless you default on rent payments. Ask your bank for details however in most cases the management of a letter of credit might cost a few hundred dollars per year. Then if you default on rent payments and the landlord withdrawals money you will be charged interest on that amount. Interest is NOT charged on any money unless it’s withdrawn by the landlord. Disadvantages of Using a Letter of Credit
Types of Letter of CreditThere are many types of letter of credit and the use of each depends on the bank, credit worthiness of person leasing or buying, and the landlord or sell. The most common will be irrevocable. Letters of credit can be used if buying commercial property or leasing commercial property. Irrevocable Letter of Credit – Cannot be modified or cancelled without agreement of all parties Revocable Letter of Credit – Can be modified or cancelled by the bank at any time and for any reason. Stand-by Letter of Credit – Bank assurance that a person leasing commercial space is able to pay the landlord. The landlord does not expect to have to make any withdrawals. Letter of Credit SampleBelow is an example of a letter of credit that was used on a 90,000 sf office lease in Austin, Tx A letter of credit is a great tool to use if you can as it helps keep your cash freed up for business expenses. Make sure to carefully negotiate the conditions that a landlord must meet before they can make a draw. You want proof that the money is due and owed as well as advance written notice of landlord’s intent to draw. via Tumblr What is a Letter of Credit When Renting Commercial Property? As consumer demand shifts towards faster and more convenient medical services many healthcare providers are taking a closer look at leasing retail space for medical office use. This can be a great strategy for medical office users however as they evaluate retail locations it’s important that they consider a few things. Retail Properties Infrastructure May Not Be AcceptableRetail shopping centers were built for the traditional retail tenant. The cost to build a retail building is less than a medical office building as medical office buildings require more infrastructure. Medical office users such as urgent cares, surgery centers, clinics, etc., have vastly different needs than a retail store. For example the mechanical, electrical, plumbing, and HVAC requirements may not meet medical office standards. Tenant MixA high traffic shopping center may look like a great location for a medical office however you need to evaluate the impact that the tenant mix could have to parking and getting into and out of the retail center. Do you want to be next to a major grocery store or next to a big box retail tenant that generates a ton of street and parking lot traffic? There are some benefits however those may not be not as desirable as a smaller retail strip center that has more convenient parking. As consumers focus more on convenience and less on the provider it’s important that you look at easy ingress and egress. Ideally you want to be located in a retail center with somewhat comparable tenants. Being next to a Planet K may give your medical office a negative image. Looks for locations that have tenants that you think your clients respect and use. ParkingConvenient parking is one of the main reasons you would consider leasing retail space for medical office use as this will enhance the patients overall experience. Easy in and easy out. Look for highly visible, smaller shopping centers in densely populated neighborhoods with above standard demographics. If you lease space in a large shopping center or big box power center your patients may have to compete for parking spaces and since those are mainly found on major thoroughfares getting to and from may take longer. Tenant Improvements Costs are HigherMedical office property owners are more familiar with the build-out requirements of medical users and typically offer larger tenant improvement allowances. Shopping center owners are not familiar with medical office buildouts and don’t typically provide as much allowance. Medical officer users have a great demand for landlord funded tenant improvement allowances which can make things challenging. Medical office buildouts typically range from $70 to $150 sf and this does not include FF&E. When negotiating a lease for medical use in a retail shopping center you may have to sign at least a 7-10 year lease to get an allowance equal to what you would from a medical office building owner. Lease ContractRetail lease contracts are different from medical office leases and fail to address the key components of medical tenancy. Most retail leases will be boiler plate and focus on retail tenants. Below are a few things to consider when evaluating a retail lease contract for medical office use. Permitted Use – there maybe a clause in the lease that does not allow medical use which would need to be stricken entirely. Medical tenants would also want to ensure that they can get an exclusive and that no other tenant has an exclusive that would prevent medical use. For example Walgreens or CVS may have an exclusive right to medical services. Power & Compliance – Some medical tenants may have higher electrical needs (e.g. X- ray machines, CT scans, MRI, and other diagnostic equipment) or back up generator needs so it’s important to ensure you have language that defines and allows this. Also, medical tenants have HIPPA and other standards to adhere to so make sure the retail shopping center contract addresses this in detail. Relocation clause – Its common for retail leases to have a relocation clause that allows the landlord to relocate them if needed. Because of the cost of a medical office buildout any relocation clause should be stricken from the lease. Liens – Many healthcare practices finance improvement costs as well as medical equipment and other FF&E. Therefore make sure that the landlords lien rights are subordinate to the tenants. Restoration – Some leases may have a clause that requires a retail tenant to restore the space to original condition before they move out. As a medical office user you want to strike this request. Privacy – Retail landlords typically negotiate the right to enter the space to show prospective tenants or ensure compliance with the lease and/or make repairs. Healthcare providers need to limit this access to exam rooms and patient record rooms. At the end of the day you need have a real estate attorney that specializes in medical office spaces review the lease. Healthcare providers have unique needs and before leasing retail space it’s important that you ensure the retail location can accommodate your current and future medical space needs.
via Blogger Leasing Retail Space for Medical Office Use If you have ever renovated a home you know that things almost never go as planned. Before you start your next house remodel consider the advice below from many homeowners that have been through the process. If you want to increase your chances of a successful remodel follow these guidelines!
via Blogger 30 Home Remodeling Ideas | Advice When Doing House Renovations |
AuthorThe experienced commercial realtors at Austin Tenant Advisors specialize in representing the best interests of buyers and tenants in the Search, Selection, Negotiation, and Occupancy of Office, Retail, Industrial & Warehouse Space for lease, rent, or sale in and around Travis, Williamson, Hays, Bastrop, & Burnet Counties, which are the 5 largest counties in Central Texas. We serve the surrounding cities such as Pflugerville, Round Rock, Georgetown, Leander, Cedar Park, Lakeway, Bee Cave, Sunset Valley, Dripping Springs, Buda, Kyle, San Marcos, Burnet, Marble Falls, and more. Archives
November 2020
Categories |