Retail, office, and industrial buildings

Who this suits

Investors who want income from business tenants, and owner-occupiers who want to own their own space. A building you occupy and a building you lease out are judged differently. Decide which one you are buying.

• Leased investment
• Owner-occupied space
• A mix of both

Income and expenses

Build income from the leases: base rent, recoveries under net leases, and when each lease ends. Then subtract vacancy and re-leasing time, owner-paid costs, and reserves. A cap rate uses net operating income and leaves the mortgage out.

PEI due diligence

Confirm the zone allows each tenant’s use. Search the Contaminated Site Registry and order an environmental site assessment. Ask for a building condition report, fire inspection records, and permits for past work. On a highway site, check the entrance way permit.

Questions to ask

Ask these before you treat the rent as income.

• When does each lease end, and what are the options?
• Who pays tax, insurance, and common costs?
• What was the site used for before?
• What would it cost to re-lease a vacant unit?