Doug Donia

Real Estate Terms

Cap rate

This is a quick and easy may to determine the return on investment property will yield for a given year.  Simply put, it is the ratio of Net Operating Income (NOI) to property asset value. For example, if a property was listed for $100,000 and generated an NOI of $10,000, then the cap rate would be $10,000/$100,000, or 10%.

Lease terms

The "terms" of a lease would include all of the items that the tenant and landlord agree to provide or follow as written in that document.  They can extend well beyond just the length of time and the rental rate.  Items such as who pays to fix the roof and the HVAC, or in retail, the hours of operation and the type of sign you can install are all "terms" that can be negotiated in a lease.  The list is extensive and each lease is different.

Comparative lease rates

Comparative lease rates (comps) is a collection of similar properties and what rental rate and terms for which they were leased. Knowing this can help you formulate a fair offer to present to the landlord, or if you are the landlord, to accept from a prospective tenant.

Concession

In addition to lowering the rental rate, landlords may also consider offering other items to make the deal more affordable.  Simple items such as new paint and carpet can be included free to the tenant.  Other less obvious things could include reduced security deposits which can be helpful to new businesses with tight cash flow.

Rent abatement

Rent abatement is just another way of saying free rent.  It's not uncommon to get some time for free, usually at the beginning of a lease, to allow for build out, moving, etc.  Knowing how much to ask for is important.  You don't want to be greedy, but you also do not want to leave any money on the table either.

Commercial Real Estate

Charlotte Metro and Cabarrus County

Contact info

Doug Donia
704-707-6648

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New Branch Real Estate Advisors
363 Church St N., Suite 240
Concord, NC 28025
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