When you participate in the sale, management or rental of commercial goods, your knowledge of rental methods and rentals is essential for your work. There are many ways to rent a property with a group of rental alternatives also complex. The details below will help you the questions you should ask.
At the heart of that all is what we call market rental evidence and trends. The key questions to ask here are:
What is the level of market rental for the premises in question?
How do subject premises compare on the market to other properties?
You must ask and answer these questions if you want to establish a rental from the market. We have property evaluators who are very interested in monitoring this for the definition of future ownership values. We also have local sales and rental people who need to know what is the rental potential for a property since the property is essentially an investment. Cash flows come from the rental. Get the right to rent and you have a good real estate investment. Everything for a good real estate sale in the future.
So what questions do you need to seek to understand the market rental levels? Here is a checklist to help you.
The location of the premises must be totally understood. This is the location in the property and the location of the property. Are there any changes in the local area that could affect property in the future? Your review should include local roads, community demographics, business feeling, property zoning and neighboring properties.
The physical size of the premises is important. The smaller the premises, the higher the rent per surface unit (M2 or FT2). That’s why we break the rental up to an area rate.
The quality of the premises must be examined. This includes age, services, amenities, facilities, fittings, disposition of property and property improvements.
The proximity of other tenants and businesses can be a factor of adjusting rent levels. You must examine these other tenants and determine if they have a positive or negative impact on your subject premises.
If your premises are part of a larger retail property, customer numbers to the property and the direction of foot traffic will be important in the understanding and fixing of the rental.
Understand whether incentives are active or have been given in other leases you compare your premises at. Incentives will affect your market rental assessment.
Are the rents from other premises compared to doing on a net or gross basis?
What are the recoverable expenses in the rental agreement in question and the others to which you compare your premises? You can only compare as with like.
What is the method of revising the rents used to define the rentals in the comparable rooms? You can only compare your premises to a real market rental in other leases.
Are there options in leases and how will this affect the assessment of market rental?
Are there clauses in comparable space leases that affect the lease, which creates a reduction or a premium?
You can add to this list when your location and specialty of the property dictate. It is important to note that you gather all the facts before defining a market rental in your property.
Each commercial or commercial property has unique elements that can affect the rental. The only way you can understand that this uniqueness is to inspect the premises and the other to which you compare. Make the notes, then adjust the numbers according to the differences between the properties.