It’s unfair to assume that all commercial landlords are out to get you. Most are perfectly honest and simply hardworking business owners like you.

Unfortunately, there are always some bad apples. And these bad apples can cost you thousands of dollars if they dupe you into signing an unfavorable lease. The damage can be so severe that it costs you your business.

To help you protect yourself, here are 3 common lies that should set off alarm bells.

“If You Work With a Broker, I Have to Raise Your Rent”

 

They may claim that they need to raise your rent slightly to offset the cost of a commercial real estate broker or agent’s commission.

This is most likely less about saving you money and more about limiting your options.

They may be acutely aware that there are far better deals in the same market. If they can keep you from working with an agent, they can keep you from finding out about those better deals.

“A Personal Guarantee is a Deal-Breaker”

Doing something to protect themselves could be a deal-breaker. But this doesn’t have to take the form of a personal guarantee.

A shady landlord may try to leverage the fact that your business is new and unproven to convince you that they’re taking a big risk on you. Any risk they’re taking still does not justify you putting yourself personally at risk.

We’ve covered this topic quite extensively, and we invite you to read our commercial lease personal guarantee guide by clicking that link. There are other ways to appease and protect a landlord who’s concerned you may default on your lease.

“We Can Work Out a Better Deal if You Pay Cash”

Any time your landlord wants to do anything off of the books, this is a big red flag and likely a sign you should walk away.

Why do they want to take this off the books? What are they trying to hide? What risk are you about to expose yourself to? These are all questions that you need to ask.

Your first couple of years of business are all about establishing your legitimacy and respectability. You want your bank to see cash going in and out of your account, as you prove to them that you can sell your offering, while you pay your employees and rent.

It’s OK to pay someone who mows your lawn or paints your garage cash for their service. But this is almost always a bad idea for any situation in the world of business. They’re trying to hide their income and revenue from someone, most likely the government. So, what happens when they get caught? Can they drag you down with them? Absolutely.

Keep your business on the up and up by always making sure your transactions are on the books, particularly when it comes to an expense as large as your rent.

These are only a few of the red flags you need to watch out for. We recommend that you have an experienced professional look over your lease before you agree to anything. If you can’t afford a real estate lawyer, you can still get the same level of service and expertise by hiring a commercial lease expert to look things over for you, at a much lower price.

Leave a Reply

Your email address will not be published. Required fields are marked *

*
*