How Much Do I Charge???
I posted this at the end of another post, but figured I try it here. Is there a quick formula to figuring out how much to charge your tenant in a commercial property? The business in question is a small 1,100 square foot restuarant. Perhaps a cost per sq ft?
Dear Jeffm,
Congratulations, you have posed the most difficult question of the day.
To answer such a question I would have to be there, look at the site, know the history of other activities around and check out the approx volume of operation etc etc.
Short cut. Check the other rentals in the area find out what the Sq. Ft. rental rate is. You then quote that as the floor. (The ongoing continuing monthly rental payment.) You then charge a percentage of the gross. It varies so much I cannot quote. 5% to 10%.
It works like this when they start up no money coming in or very little. You get the standard amount you quoted as the floor. Every month you get a look at his gross monies. In time, (God Willing) the Gross goes up and soon it passes the steady floor amount. That overage my dear friend is yours. As business gets better you get more, you participate in his good fortune, but when things go bad, you still have your floor which is the bottom amount that he pays in monthly rent. Seems unfair, of course, you are the landlord. Of course it is unfair, that is how life is lived here in the 21st Century.
Get Rich, Is the food any good?
Lucius
Thanx for the post. I'm having lunch there on Wed. so I'll have to get back with you on the food.
Tomorrow I'll try and get some local quotes of the surrounding businesses and see what's doing. I spoke with the realtor tonight and got nowhere. We'll see what I can dig up.