In these economic times your business sometimes needs to be lean and mean, slipping through hurdles and roadblocks like a greased lightning bolt. Like doing the limbo on a sinking Italian cruise ship! OK, not funny.
Ever heard the expression, “Penny wise, pound foolish?” I have seen whole families go asunder on an ill-thought-out signing of a long term commercial lease. Residential leases, at least in California, are rarely enforced. But commercial is a whole different ballgame. Think about the numbers. “Five years at $1,200 a month” may not sound that bad. But what if your business is brand new and may not have any real sales for a long time? How does “$72,000″ sound? That is how much you will owe the landlord after you sign that lease, if he can’t mitigate his damages when you default by finding a new sucker tenant.
Personally, I know an astute retailer who, despite the landlord pushing a long lease on him, has been month to month for going on a decade! If the landlord ever did boot him out with 30 days’ notice, so what? He could find another place. Have you seen all the “For Lease” signs everywhere these days?
As a commercial landlord, I have a tenant who never signed a new lease after the first three-year term. So he is month to month now. I worried about this at first. But the calendar flips over, and it’s been about five years and it is working out fine.
Be certain your business is a going concern with lots of cash available if you choose to sign any long term real estate lease. I have seen bankruptcies happen to otherwise stable families, all because of a not-thought-out lease signing!
Wait! You Signed A What? A Long Term Lease?!
