Principles of Real estate

Paper details:

You and two business partners are considering the purchase of the following commercial investment property: Commercial Property: Estimated purchase price: $600,000 (building only) Type of property: Mixed-use Units: 3 residential second floor Apts. – (A) 1,500 sq. ft., (B) 1,250 sq. ft and (C) 850 sq. ft. 3 retail ground floor Units, with separate entrances, 1,200 sq. ft. each. Lease Information: Residential Apartments: All residential units are rented. Retail Units-annual rental revenues: Each Retail Unit is under a month-to-month gross (MTM) lease. Other Information: The property is subject to a 50 years ground lease (all property interests reverts to the seller at the end of the ground lease). The property purchaser with pay the seller an annual ground lease payment of $20,000. Each investor will purchase a 1/3 interest in the investment. Provide your business partners with the following information: 1.What type of leasehold estate is a ground lease? 2.How does the ground lease impact their property ownership? 3.Besides obligation to pay the ground lease rent, are there any other expenses they would have to pay? 4.What happens to property / investment at the end of the ground lease term? 5.Is there an option to renew the ground lease? If not, how may it be included? 6.Identify the characteristics of other commercial lease types that may provide greater rental income by charging common area maintenance costs (CAM) to the tenants. 7.Based on your analysis in item 6 above, provide a recommendation of a lease type that should be used for the three retail tenants that will maximize retail rental revenues. 8.The seller has made you aware that one of the retail tenants will eventually need more space and may need to move to a different property within the next 12-24 months. The tenant is expected to ask for a provision in the lease that will allow the sublet or assignment of the premises. 9.Describe the differences between a sublet and an assignment lease provision. Provide a recommendation as to which provision is most beneficial to the investors. 10.Your business partners are concerned that some tenants may not like the change in ownership and attempt to get out of their lease obligations. Describe how leases may be terminated. 11.List the remedies available to them in case of a breach in the lease terms. 12.List the different ways to hold title in the investment. 13.Provide a recommendation that will be acceptable to all business partners / investors.