Rossmoor is often believed to be part of Las Alamitos, but it actually is not. Rather, it is its own place, and an affluent planned census-designated one at that. It is found in Orange County, CA, its population was 10,244 in 2010, according to the last census, which represented a small decline over the past two years. This is a close community, with two impressive shopping centers. However, only Rossmoor Village Square actually falls within its Community Services District. The Rossmoor Business Center, which is now called Shops at Rossmoor, is actually part of the city of Seal Beach. It was annexed, under heavy protest, in 1967. Rossmoor is an incredibly affluent city, with a median household income of $108,807.
Rossmoor Commercial Buildings for Sale & Lease
The economy of Rossmoor is very interesting, not in the least because of the affluence of the city. This is also why so many people are interested in investing in commercial real estate. Many aim to purchase it in order to become landlords, hoping to see their investment grow while at the same time earning an income. Others want to purchase commercial properties because they want to run their own business in it. Others still, business owners in particular, look for properties to lease, which has its own distinct advantages and disadvantages.
While you only have one option if you want to be a property investor – purchasing commercial real estate – you can either buy or lease property to run your own business. Deciding between the Rossmoor commercial buildings for sale & lease options, however, is a very complex issue. It isn’t as easy as simply comparing what the monthly lease price is, versus the monthly mortgage price. For starters, a lease requires a security deposit and a mortgage requires a down payment, which are very different in terms of amounts, but are both capital that is then tied up, rather than used to grow the business. Furthermore, both options have different tax advantages, different associated costs, different insurances, and more. Hence, you need to really consider everything that is involved before you can decide which one of the two options is financially better for you. The best way to achieve this is to talk to a lawyer and an accountant, who have a greater insight into these issues. Furthermore, whichever option you go for, you will need their services as well.
Rossmoor Commercial Property for Sale
One place to start with comparing your options, whether you want to run a business or make an investment, is in trends in Rossmoor commercial property for sale:
- Multifamily properties in the county usually cost around $314,841.90, which is a 0.7% rise compared to the last three months, and a 10.5% rise in one year.
- Office properties in the county usually cost around $311.66 per square foot. This is a decrease of 0.2% from the previous quarter, although a 11.3% rise in one year.
- Industrial properties in the county usually cost around $222.13 per square foot, which equates to a rise of 2.7% during the last three months and a year on year rise of 10.9%.
- Retail properties usually cost around $408.88 per square foot, which has been stagnant over the past quarter. Year on year, however, this is a 14.5% rise.
Rossmoor Commercial Property for Lease
In the vast majority of cases where someone is looking for commercial real estate to run a business out of, leasing is the only viable option. This is mainly due to the fact that the down payment on a commercial mortgage is 30%, far more than what most businesses have available. However, just because you know that you have to lease does not mean the rest of your search is easy. This is because you have to actually find a property first, and that is where the next hurdle appears.
To find a Rossmoor commercial property for lease, you need a broker. Broker fees are usually paid for by the landlord. You have the option of going to a tenant broker, whose responsibility is to act on your behalf. While this may sound like the better option, you usually have to sign a representation agreement with tenant brokers, which means that you can only consider the properties that they actually represent. The alternative is working with a leasing agent. You can work with multiple leasing agents, so that you can see every property that is available. While this may sound like the better option, therefore, the downside is that the leasing agent works on behalf of the landlord, and not yours.
Things to Negotiate On
Once you have chosen your broker, and you have chosen a property that you are interested in, the work still isn’t complete. Something that many people aren’t aware of is that, unlike with residential tenancy agreements, a lease agreement is fully negotiable until it is actually signed. This means that you can work with the landlord, making offers and counteroffers, to create a deal that is most suitable to your personal needs. This is also where your lawyer, accountant, and broker come together, as they are the ones that will hold the negotiations. Just some of the points in a lease contract that they can work on include:
- The length and extent of your personal guarantee
- How much you have to pay each month for the lease itself, and what that is based on
- The type of lease construction that is most beneficial to you (percentage lease, net lease, triple net lease, or gross lease)
- The duration of your lease and what happens when it ends
- The possible rent increases, what they are linked to, and how much is the cap
- Where the responsibility for maintenance will lie
- To what extent you are able to change the inside of the building and who will shoulder the renovation costs
- Whether you can signpost your store on the outside of the building
- Whether you can sublease the space and, if so, under what conditions
- What types of exit clauses are in place should you want to leave early
- Your right to transfer your lease if you were to sell your business to a third party
- Specific clauses such as exclusive use or co-tenancy
- The security deposit
Pros and Cons of Purchasing a Commercial Property
Besides explaining why it often takes a very long time to actually find a property, agree on a lease, and actually move in, it also demonstrates just how complex leases actually are. In fact, some find them so complex that they will prefer to purchase their commercial real estate instead. After all, this means that, so long as you stick to local ordinances, building codes, and zoning regulations, you can effectively do what you please with the property you have purchased.
However, purchasing commercial real estate also has some significant disadvantages:
- The aforementioned 30% down payment on a mortgage is usually such a big stumbling block that people simply cannot manage it.
- Zoning laws can be somewhat restrictive, and although you can apply for re-zoning, this is generally very expensive and most of the times unsuccessful.
- If you purchase your own commercial real estate and don’t, or no longer want to run a business out of it, you will have to become a landlord. This in turn means that you still have all the difficulties of the lease contract, now from the other point of view – that of the landlord.
The three disadvantages above are significant disadvantages, but it still doesn’t mean that you shouldn’t consider a purchase. Commercial real estate is known to be a solid investment with very little risk and very high yields. There is always a demand for commercial property, which means that finding a tenant for your property is generally quite easy to do, even in times of economic difficulties. Furthermore, prices of commercial real estate often rise more quickly than those of domestic and residential properties.
That being said, the first point in particular is one that is very difficult to overcome. However, there is an alternative that you may want to consider, which is the commercial real estate investment trust, or REIT. A REIT essentially means a group of people come together and pool their money and resources to purchase commercial real estate. The goal of this is purely to make more money, with properties being bought and sold as their value changes. However, this solution also has two significant disadvantages:
- You never actually own a property yourself, meaning you can never really use it either.
- You have far less control over how the property is used.
On the other hand, it also means that you don’t have any landlord responsibilities, nor do you have to worry about finding tenants, negotiating leases, or any of those other issues.
Conclusion
As you can see, every option has significant pros and cons. Only you can decide which advantages outweigh the disadvantages, and which option is therefore best for you. Make sure you speak to your lawyer and accountant, therefore, to help you decide which one of the two is the right one for you.