4 things to know before you become a commercial property investor
The laws are very different from residential
If you’ve been a residential landlord, be aware that getting into commercial leasing is an entirely different ball game – especially when it comes to removing tenants.
It’s very, very different from residential. You might think that if a tenant doesn’t pay their lease, you can just kick them out. But with commercial you’ve got to make sure that you’ve jumped through all the hoops before you’re able to evict a tenant.
Make sure you’re as protected as possible
When it comes to commercial property leases, it’s rarely a case of “one document fits all.
He advises recruiting a lawyer experienced in commercial property law to go through your lease in detail and add extra clauses where possible.
In Victoria, there’s fairly standard lease documentation that’s provided by the Law Institute of Victoria and is used in about 99% of leases
People say they’ll just use the standard documentation but it doesn’t actually provide for all the circumstances that may occur. There are provisions there that allow you to put in extra clauses. You really need a lawyer who’s very experienced in the commercial leasing area to make sure there are extra clauses in your lease to suit you.
Not all leases are made equal
Leases on different types of commercial buildings generally lean in favour of the landlord – except for retail.
A separate Act covers retail leases, and that gives the tenant a lot more protection
It’s quite vital that someone that’s buying a premise fully understands whether it’s actually regarded as being retail-leased premises or normal commercial premises.
When renting out your commercial premises, you may spend some extra cash to prepare the lease.
With a retail lease, the landlord has to actually cover the cost of preparing the lease, whereas, with a normal commercial lease, it’s the tenant who pays for that.