Dinn, Hochman & Potter, LLC

Real estate lease may be new business' best option

Many times, when an Ohio business is first starting out, the business owner must decide between renting or buying space in which to operate the business. This decision is often based upon a variety of things such as the current real estate market, financing options and available capital. Many new business ventures find that leasing property is the appropriate option in the beginning.

Once the decision to lease has been made and a location has been selected, the type of lease and cost will be of primary interest. On one end of the spectrum is the fixed lease. With this lease, a set dollar amount is agreed upon, and that is what is paid for the duration of the lease.

Other lease types will establish whether the owner or the lessee pays for the operating costs associated with the facility, cost of living increases and utilities. Real estate taxes, insurance and building maintenance are all key components that can be included based upon the type of lease and its terms. Either the owner or the tenant can be responsible for them, or there can be some agreement in which each party is responsible for part.

At the other end of the spectrum is a percentage lease. With this type of lease, the business owner pays a fixed rental amount plus a percentage of the gross income of the business. In addition to increased costs, this type of lease requires regular income reporting to the property owner. Real estate decisions can often play an important part in the success or failure of a new Ohio business venture. An experienced attorney can assist the business owner in reviewing the lease options and deciding what is in the business' best interest.

Source: smallbusiness.findlaw.com, "Types of Leases", Accessed on May 30, 2017

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