Tag Archives: rent

How to get office or retail space on the cheap

In the last decade I have chosen office or retail space for quite a lot of businesses. Much of this is about Arizona but it should mostly ring true for most of the nation.

Of course, if you have the credit the BEST space is one you can buy.  If you have enough cash and credit to buy a building 3-6 times larger than you need and then rent out the rest you are very lucky and this should be done whenever you can.   I know many businesses that decided to buy and they rent out the rest of the building for more than their entire mortgage.  Remember, the same is true in commercial as in residential, when you rent your cost will always go up but when you own you lock in your mortgage payment at the start, and you are paying it back later and at the same monthly rate for the term of the loan. (Usually)  I also know a few business that, after 10 years or so, hit a bump in the road and were able to take out some of the equity in their building to keep their business going.  Lack of access to credit is a quick way for a growing business to fail, or for an entire economy to falter.

Now if you must rent you still have many options.  You are the one picking the building so you get to pick your neighbors.  Spend a day talking to them before you lease, ask them how the foot traffic is, ask them about the amount and types of customers they have.  See if they sell products that will attract customers that may buy your products.  Back in 2001 I located a computer store next door to a cad software and training company, during the first few years we received many of our customers from them simply because they needed a computer to run their cad things.  In 2006 that company moved away.

You also get to pick your landlord.  I have found time and again that you really want a local landlord, the smaller the landlord the more they need you and also the more willing they will be to break the rules when and if you need it.  Also they are much more likely to be helpful if you get behind because they need you.  If you are dealing with a property management company with distant owners they don’t care if you live or die really, the property management gets paid both ways.

You also get to set the terms of the agreement.  Many landlords like to hide tons of little details in their contracts.  One even tried to tell me what hours I needed to have a store open.  Another told me where we could park.  Before you sign the contract you can negotiate on anything you like, and most of these clauses are easily removed.  But one thing that has saved me tons of money is agreeing to take units as is in exchange for many months of free rent.  Many landlords will pay people to fix up the space but if you are willing to take it as is you will get exactly what you want and you can save thousands of dollars.  In one example we got into a location in 2004 and received 4 months of free rent in exchange for taking the unit as is.  All we needed to do was paint, put in new carpet and run our networking cables, which would we have had to have done no matter what.  We got the carpet 24 months no interest, we had some of our employees paint the unit and our total immediate out of pocket cost was less than 1 month of rent.  We now had 3 months for free, leaving us money to get some nice furniture and such.  Another term we always have looked at is about competition.  We don’t want someone to open up who is going to take away our customers so we make a long list of things we do and put in the contract that no one else who does these things can move in. Another clause that we put in that is helpful is the first right of refusal.  Basically this states that if the units adjacent to yours are empty and someone is looking at renting it that the landlord must call you and tell you that someone new is getting ready to move in, you then have 48 hours to decide if you want it or not.  This is very important if you ever plan to expand without moving.  If you foot traffic mostly comes from an anchor store you should also put in a clause saying that if the anchor store goes out of business you will receive rent at half price, and after three months you have the option to dissolve your lease at any time in case you want to move out.  We used this clause once in 2006, and it saved us a ton of money when the albersons wanted to leave, we got out of the lease 2 years early.

Getting a buyers agent is a great idea, the landlord is going to pay for one no matter what so don’t just call his agent, get one of your own who will work for you and have them talk to the landlord.  They will fight harder and you will end up with a much better deal in the end.

Once you have the unit there are a ton more ways to save money, more on that in another blog.

A story from the heart, what drives me.

I often think about my dreams. To me almost all of my dreams have to do with my legacy, what I leave behind for future generations. For me there are a few things that really give me a great since of satisfaction. First, I really think that it is important to help out people who need help, and want the help. The think that I feel really made my life what it is the fact that I had access to education and tools to take advantage of that access. I started high school in 1989, and I was the only person I knew who had a computer at that time. I also spent a huge amount of time learning. By the end of high school I knew more about computers than any teacher there, same thing went when I was in college, almost all of this was self taught. (In high school I entered into a state competition, and got first place in the entire state for computer expertise) I only placed number 24 when I went to the national competition.

To everyone’s surprise computers turned out to be a huge industry, taking control of much of how the entire world works. I was given a huge advantage. Now we all know that computers are VERY important to success, so I have gone on a plan to give very poor children, access to computers, and access to quality education. These are kids that would not be able to get a good education or maybe even go to school. These are kids that will live a very poor life if we do not step in to help. This year we are looking to support 7 kids. The cost for one year is about $800 per kid. I am trying hard to raise this money now because it needs to be committed by the first of June. If you want to help out you can donate using PayPal. (Just send to my email [dragon(at)capitalactive.com] as a donation) Anything you send will go directly to help these kids.  This photo is of the 4 kids we helped in 2007, before they met us they were living in a small shack, with a tarp as a roof, they never had been more than 10 miles from home, and never even seen a mall.  (I have before pictures also but they would break your heart.)  They were very smart but the schools they went to were very poor, and this kids were years behind the city kids, even though they were near the top of their class in their rural schools.  In one year they were able to catch up and pass the city kids, we gave them quality food, clothes, and housing.  This year I want to do even more.   My goal is to support 7 kids.  We will use these 4 and add 3 boys.  Without your help I don’t know if I can do it.

The next thing is a much larger thing. I really want to develop Real Estate. I have always been interested in architecture and large buildings. When you see a large building you know that someone designed it and also someone thought of it and paid for it to be built. To me this is the ultimate legacy. I want to build great unique buildings that will stand out. I decided to go a different path, and I went into computers and business. But now I want to go into. I firmly believe in the mixed use real estate concept. Basically building communities, of housing, work, and shopping all in the same mega complex. This is the way life used to be but, here in the southwest, the car made all of these things disperse. Most people travel many miles to work, and at least a mile to shop. There is no community left in many places and this lack of community is one of the major things destroying our country. Imagine if you lived on the 7th floor of the building, shopped on the first and second floor and worked in your office on the 15th floor. All the while you had many friends, and felt like you truly belonged. I don’t just want to do real estate; I want to do real estate with a purpose. I have a young son, only 9 months now, and I want to leave him a legacy he can be proud of, and one he can carry on.

I also want to provide quality housing to people in need. Imagine going to a city in Asia, where the people are poor, and getting the community to work together to build a massive complex, I would supply the materials and organization, the community would do most of the work, and we would own the building and charge a very low rent. People would have the ability to move up from the squalor to live in healthy and much higher quality housing. What is I can do that, and impact a thousand lives in a very profound way. This is the legacy that I want to leave.

Now I am only 32 now, I have decades to do this. I am looking for like minded people who will know more than me to advise on these projects. I don’t think I will have the resources for a few years to do such a thing, but once I do it will roll on and on.

This is my WHY, this is the reason I want to be hugely successful, this is the reason why I need to make the things I do work. It is much more than me I do this for.

If you know of ways to get this done faster or cheaper I would love to hear from you. Please email me or comment below. Thanks.