Leasing out space, what to charge?

[dgreen1069]

I am in the process of leasing out part of a fenced, gravel, and lighted lot I am purchasing. There is a current leasee that is paying around $400 a month for about 10,500sq/ft. The lot is in Manassas, VA. My plan is to offer trailer storage for $55 a month, but this tenant would like to keep his lease for his fencing business. As of now he is leasing about a 3rd of the area which is fenced off seperately from the rest. What do you all think is a fair price. My thought is $700 a month....I don't want to go too high (I want to be fair), but my mortgage is going to be 5x's what the old owners was.

 

[BLACK6PACK]

If the mortgage is 3000 for the entire lot, and he is taking up 1/3 of the lot, I'd charge him $1000 a month and show him exactly why. If the $700 a month is more than that percentage, then I wouldn't show him why its $700, I'd just tell him that the mortgage is higher.

 

[dgreen1069]

$700 is a third of the mortgage...that was my reasoning also. I was hoping someone who is renting space like this in an urban area could give me an idea of what they are paying.

 

[bruce]

$700 is a third of the mortgage...that was my reasoning also. I was hoping someone who is renting space like this in an urban area could give me an idea of what they are paying.

If you're leasing property to break even, why bother?. At least in a saving account you can get 2% interest (meant sarcastically), and it's insured.

IMO, you should charge at least 2x what ever you could make in a market account on some of the old standbys, and plus insurance, and something towards retirement. ie at least 12% more then your actual *cost*. If it's costing you $1,000 a month, charge at LEAST $1,120.


Just my 2.384 cents.....

 

[HellOnWheels]

...and don't forget to throw in taxes, property up keep, depreciation on the fence, cost of the gravel, lighting, etc....

 

[dgreen1069]

Unfortunately, I'm not sure I can lease the property for what my payment is going to be. As far as making money, property in this area is appreciating at about 16% a year....far faster than any other financial market. I'd like to charge the tenant a fair amount. He has been paying 400-450 for the last 4 years....to me that seems awfully cheap for 10,500sq/ft of space. If he wants to stay his rent is definitely going to go up, I just don't know what is fair for both of us.

 

[BLACK6PACK]

I work for a big commercial development company. One of the things our construction company does is have an open book policy. If we bid a construction job for $50,000,000 and bring it in at $49,000,000 we split the profit with the owner. Point is, show him what its going to cost you for that parcel of land, and come up with a win win situation for both of you.