You, as a Charlotte small business owner, are probably well aware of the significance of your company's location. This is especially true if you run a retail store or provide a service that requires Charlotte consumers to come to you - you'll need a site that's easy to find and has a lot of foot traffic.
Even if you only require an office from which your employees can work – a heretical thought in today's work-from-home era – the location and amenities of your workplace are critical considerations.
You're concerned about the financial elements of this decision in addition to the location.
And, of course, this is totally up my alley. So, let's take a look at these financial concerns.
But first, a couple brief tax considerations:
1) The deadline for anticipated tax payments has not been extended for everyone who is subject to them (you should know who you are). Your estimated taxes for the first quarter are due THIS THURSDAY, April 15th.
Yes, this is just one of the many factors that have made this tax season... unique.
If you haven't paid them yet, the simplest alternative is to go to the IRS website and pay them directly.
Please contact us if you need assistance determining how much to pay:
https://calendly.com/saragonzalez
Please be patient with us when communicating with us; we have been, and continue to be, inundated with questions as a result of the complex nature of this year's moving deadlines. But (despite this year being a little "extra"), this is always the case... We've prepared for it, and we're on your side.
Now is the time to take advantage of commercial real estate opportunities in Charlotte.
“You may be disappointed if you fail, but you are doomed if you don’t try.” – Beverly Sill
Let's get our facts straight before we dive into the current options for your working space.
Commercial leases are an entirely different beast than residential leases. If you've ever leased a house or apartment, you know the drill: pay the rent on time, don't destroy the place, and you get to live there. It's that simple.
Commercial leases can be that straightforward, but they aren't always. A business lease will include the standard terms, such as the length of the lease and what you may and cannot do on the property. The financial jargon, on the other hand, may be utterly unfamiliar to you.
A gross lease, which is most similar to a domestic lease, is the most basic sort of commercial lease. Your landlord will cover the majority of the costs connected with property maintenance in this type of arrangement. They will maintain the property, pay the property taxes, and possibly pay some or all of the utilities. For us as Charlotte business owners, these sorts of leases are convenient and straightforward. They are, unfortunately, the most uncommon type of commercial leasing.
A net lease is the most typical sort of agreement you'll come across, and it becomes a lot more difficult. You'll pay a predetermined amount of rent each month to occupy the space in a net lease, but you'll also be responsible for part of the property's variable costs. You may be obliged to pay all or part of the property taxes, insurance, and maintenance, for example. You'll be responsible for all of the utilities as well.
Triple net lease is a term used frequently in commercial real estate. The initials NNN in a space advertisement could suggest this. This is a net lease, which means the tenant is responsible for the entire payment. The three Ns stand for property tax, insurance, and upkeep.
While more complicated, a net lease allows you to understand and monitor the property's operational expenses as well as negotiate with the landlord. During difficult economic circumstances, when landlords are under more pressure, they are more likely to negotiate the products you pay for. You may end up paying less than you would on a gross lease this way.
Should I relocate my current business location?
Millions of businesses across the country were shuttering their doors a year ago. Many of them are never going to reopen. This has put commercial real estate landlords in a tight spot, and they are in dire need of a paying renter.
This provides you with an opportunity.
If your current lease is up and you're looking to move, or if you're just starting out, now could be an excellent moment to get a premium location for a low price. The only thing that building owners desire is for someone to pay rent to cover the costs of running the building or paying the mortgage. Empty space in a commercial real estate building does not only appear bad, but it can also limit foot traffic owing to the sense of problems with the property.
Take advantage of the situation by inquiring about vacant premises that might be suitable for your company. If you know of any other business owners who have had to abandon their facility owing to cash flow problems, ask them to connect you with their landlord, as you may be able to take over a lease on favourable terms. This is a win-win situation for both the landlord and the other (or “former”) business owner.
If your company has been in the same area for a long time and is well-known for being in that location, you may want to reconsider leaving. Even if you're well established in an iconic location, shifting may be the prudent thing to do if money is tight and getting tighter. This is a discussion I'd be delighted to have with you.
Should I purchase or lease my business space?
If you're in a financial position to do so, this might be an excellent moment to consider purchasing your business premises. Leasing gives you a lot more freedom in the future, but if your business is doing well and you envision yourself staying in the same place for the rest of your life, now could be an excellent time to buy. Would you be inclined to buy if your present landlord wanted to sell their property to de-risk their own portfolio in the current economic situation?
In the long run, owning a home can save money. Rather than paying your landlord ever-increasing rents, you would reap the benefits of the property's appreciation. You may plan for the following 5 to 10 years because your base "rent" expense is fixed for the duration of your business mortgage.
Commercial real estate financing, on the other hand, is a very different beast than house financing. Commercial mortgages usually require a higher down payment and are for 10 years or fewer, with a balloon payment at the end that requires you to either pay cash or refinance.
The choice to purchase a home necessitates a thorough examination of the financial situation. If this is something you'd like to investigate more, let us walk you through the arithmetic to see if it's a good option for you.
2021! What options do I have?
The economy is clearly the purple giant in the room right now. Talk to your landlord if your company is having financial issues and you are unable to make your current lease payments. Avoiding this conversation is the worst thing you can do. Instead, be honest about your financial situation and see what your landlord can do to help you.
Your landlord is most likely willing to change the terms of your present lease. Consider the following examples of common choices:
- Forgiveness of base rent for a limited time.
- Rent is being deferred.
- Rent arrears are paid in installments
- On a net lease, there is a change in who pays what.
- Depending on the demands and preferences of the landlord, shorten or lengthen the lease.
- Negotiating a portion of the company's sales as a down payment on the lease.
More than everything, keep in mind that your Charlotte landlord does not want an empty home. That is the worst-case scenario for them. They don't want to tell their bank about the vacancy, and they'd prefer to have some cash flow coming in to cover expenses rather than a large fat goose egg. As a result, they should be willing to work with you to find a solution.
Now is a terrific moment to be doing something with the commercial space that houses your firm, whether you're ready to move, ready to buy, or need to figure out alternative payment arrangements.
Please feel free to set up a time to talk about this aspect of your financial future. Things are particularly hectic in the field of taxation right now... However, we would be delighted to assist our clients in making the best judgments possible in this area:
https://calendly.com/saragonzalez
We’re here to help. (Especially now.)
Warmly,
Sara Gonzalez
