Patricia,
Just to let you know I did email you regarding this on my thoughts and ideas regarding your post in using a land trust solution to secure all parties and in using a triple net lease for your tenants.
Check with Ray Alcorn and other commercial experts on this.
I was interested in the creativity of this business opportunity and how to make it a win/win scenario for all parties.
This is a complex commercial transaction and the appropriate professionals need to be consulted on this.
If you like to explore a trust solution on the negotiations let me know either way I enjoyed this posting.
Good luck
Colin Bochicchio email:colin.bochicchio@qinetiq-na.com
Posted by Patricia on September 05, 2010 at 23:38:13:
I have been approached by a prospective tenant(PT) about co-sharing office space. The PT wants to rent the space (at the going rate- depressed market)and then find 20-25 add’l co-tenants in similar businesses that will pay rent directly to the PT. This will serve as a business community. The PT plans on starting a non-profit for her company but has no requirements for the “renters”.
The “renters” will pay on an as use basis. The PT will offer several options for usage. The space is ~4000’ and has some private offices within this space. These co-tenants will pay a premium for occupying the private offices. All the other “tenants” will have the option to sit at long tables or seating groups. The space would need to be modernized inside and out, furnished and equipted with technology and perks. The PT does not have the resources to do any of this and has asked me if I would provide the environment that is needed.
I think that the concept of shared space is creative and I am entertaining this proposition but have to arrive at a deal that works for me financially as I will incur a large expense. What I need to figure out is 1. How can I structure this so that I profit from the add’l rent that the co-tenants will pay? 2. Lease or leases? Should everyone have their own lease with me? 3. Liability Insurance- Mine and theirs? How and how much? I need to protect my investment. Is there insurance for these shared office environments.
When the PT and I began discussing the particulars, the PT thinks that the upfit and cost involved is worth (equal) having a new tenant and is also asking for a few months free rent. I am not in a position to offer free rent upfront but I want to create a win-win for us both. I am in the process of getting estimates now for the work and materials needed. I am new to this concept and any advice or direction given is greatly appreciated. Thank you in advance.
The note on the property was just renewed. The rental income is very (scary)LOW but it had a good LTV. How can I find the money to do the improvements on the property that I need. Your advice please. Thank you