Horizons Homes & Hustle

Navigating Commercial Leases: Key Considerations for Business Owners

Whether you’re opening your first storefront or relocating your growing business, signing a commercial lease is a major commitment. It can have a lasting impact on your operations and bottom line. Unlike residential leases, commercial leases are typically more complex and negotiable, with fewer consumer protections. That’s why it’s crucial to approach them with care, knowledge, and confidence.

Here are some key considerations every business owner should understand before signing on the dotted line:

1. Lease Type Matters

Commercial leases come in various forms, and knowing which type you’re dealing with is the first step:

• Gross Lease: The landlord covers most property expenses (taxes, insurance, maintenance).
• Net Lease: You, the tenant, pay a part or all of those extra costs. Variants include single, double, and triple net (NNN) leases.
• Modified Gross Lease: A middle-ground choice with shared responsibilities.

Understanding which type you’re signing helps you plan for costs beyond rent.

2. Rent Structure and Escalations

Don’t assume the rent will stay the same for the duration of the lease. Many leases include annual rent escalations based on a fixed percentage or tied to inflation (e.g., CPI adjustments). Be sure to ask:

• How is rent calculated?
• When and how does it increase?
• Are there any “free rent” periods or incentives?

3. Lease Term and Renewal Options

The length of the lease can affect your flexibility and growth. Consider:

• Is the initial term too short or too long for your needs?
• Are renewal options clearly spelled out?
• What are the terms for renewing or ending the lease early?

Shorter terms offer flexibility, but longer terms might come with rent discounts.

4. Tenant Improvements (TIs)

Will you need to renovate the space? Find out:

• Who pays for build-outs or customizations?
• Is there a tenant improvement allowance?
• Are there restrictions on what you can do?

Negotiating TIs upfront can save you thousands.

5. Maintenance and Repairs

Commercial leases often shift maintenance responsibilities to the tenant. Know your obligations:

• Are you responsible for HVAC, plumbing, and structural repairs?
• Who maintains common areas?
• Is there a CAM (Common Area Maintenance) charge? If so, what’s included?

Unexpected maintenance can blow up your budget if not clearly defined.

6. Use Clause and Exclusivity

The use clause defines what you can and cannot do in the space. The exclusivity clause can protect you from competitors moving in next door.

• Does the lease limit how you operate?
• Can you change your business model later?
• Are you guaranteed to be the only business of your kind in the complex?

Clarity here prevents conflicts down the road.

7. Personal Guarantees and Liability

Landlords often ask business owners to personally guarantee the lease, putting your personal assets at risk if the business fails.

• Can you negotiate to limit or remove the guarantee?
• Are there “good guy” clauses that allow you to exit early without penalty?

Don’t overlook the long-term financial implications.

8. Exit Strategy

Always have an escape route. Understand:

• What happens if you need to sublease or assign the lease?
• Are there penalties for breaking the lease?
• Can you negotiate an early termination clause?

Being trapped in a lease can be devastating during tough times.

Final Thoughts

A commercial lease isn’t just a document—it’s a business decision. Take the time to:

• Read every clause
• Consult a real estate attorney or broker
• Compare other properties and landlords

By staying informed and negotiating wisely, you can secure a lease that supports your vision rather than limiting it.

Michael Taylor, AB Permian Real Estate

Purchasing your first home is a great milestone. However, if you’re not sure where to begin, it can also feel daunting. Whether you’re dreaming of a cozy bungalow or a sleek condo downtown, this guide provides a step-by-step approach. It will help you navigate the entire home-buying process. You’ll move from pre-approval to closing with clarity and confidence.

Step 1: Assess Your Financial Health

Looking honestly at your finances before falling in love with your dream home. This includes:

• Credit Score: This is how lenders assess your loan eligibility. Strive for a score of 620 or more, as the most favorable rates are usually reserved for those exceeding 740.
• Debt-to-Income Ratio: Most lenders prefer a DTI of 36% or lower.
• Savings: You’ll need funds for a down payment (typically 3%-20% of the home’s price) and closing costs (2%-5%).

Pro Tip: Start reducing debt and increasing savings months before applying for a mortgage.

Step 2: Get Pre-Approved for a Mortgage

A pre-approval is a lender’s written estimate of how much they will loan you. This helps you:

• Understand your price range
• When competing with other purchasers, make your offer stronger.
• Spot and fix potential loan approval issues early

You must submit financial documents like W-2s, tax returns, and pay stubs. Choose a reputable lender, and don’t be afraid to shop for the best rate.

Step 3: Find a Trusted Real Estate Professional

Partnering with a professional real estate agent—especially one who’s experienced with first-time buyers—makes a huge difference. A great agent will:

• Help you find homes that match your needs and budget
• Negotiate offers and navigate contracts
• Connect you with local inspectors, lenders, and title companies

Tip: Don’t just go with the first agent you meet. Interview a few to find someone you trust and feel comfortable with.

Step 4: Start House Hunting

Now for the fun part! Make a list of “must-haves” and “nice-to-haves,” then tour homes (virtually or in person) with your agent.

Be open-minded—many first homes require a little imagination or minor improvements. You can compare properties and evaluate the benefits and drawbacks of each with the assistance of your agent.

Things to consider:

• Location & commute
• School district
• Neighborhood amenities
• Property condition & age
• Resale value

Step 5: Make an Offer

After you’ve located “the one,” your broker will assist you in creating a competitive offer that is predicated on:

• Market conditions (buyer’s or seller’s market)
• Home value comparisons (comps)
• Your pre-approval amount
• Seller motivation

Your offer will include your proposed price, financing method, contingencies (inspection, financing, appraisal), and a timeline for closing.

Step 6: Schedule a Home Inspection and Appraisal

After your offer is accepted, it’s time for due diligence:

• Home Inspection: A licensed inspector will assess the home’s condition, including its foundation, roof, plumbing, electrical, and HVAC.
• Appraisal: Your lender will order this to ensure the home is worth your pay.

If serious issues arise, you have options. You can negotiate repairs. You can ask for credits. You can even walk away, if you included an inspection contingency.

Step 7: Secure Financing

With a signed contract in hand, finalize your loan application. Your lender will:

• Verify your financial documents again
• Order an appraisal
• Process the loan through underwriting

Stay responsive to your lender’s requests; delays can push back your closing date.

Step 8: Review and Sign Closing Disclosures

You’ll get a Closing Disclosure a few days before to closing that includes the following information:

• Final loan terms
• Monthly payments
• Closing costs
• What to bring to closing

Review everything carefully, and don’t hesitate to ask questions.

Step 9: Close on Your Home

On closing day, you’ll meet with your agent, lender, and possibly the seller to:

• Sign all necessary documents
• Pay your closing costs and down payment
• Receive the keys to your new home!

Congratulations—you’re now a homeowner!

Final Thoughts

Purchasing your first home is an exciting, educational, and significant decision-making experience. Surround yourself with trusted professionals, take the time to understand each step, and don’t rush. The right home is worth the wait.

Michael Taylor, AB Permian Real Estate

Starting a business is like stepping into a wild frontier—exciting, unpredictable, and full of potential pitfalls. Whether you’re launching a tech startup, a coffee shop, or laying the groundwork for a real estate venture, the early days are full of rookie errors. Here are the top five mistakes new business owners make, based on hard-earned lessons from entrepreneurs who’ve been there and tips to sidestep them.

1. Skipping the Plan
   Many newbies dive in headfirst without a solid business plan. Passion is great, but without a roadmap, you’re just guessing. 70% of businesses with a written plan survive past five years, compared to 40% without one.
   Fix It: Draft a simple plan—goals, target market, budget, and a timeline. It doesn’t need to be a 50-page novel; even a one-pager keeps you focused. For real estate pros, this means mapping out your niche (luxury homes? rentals?) before chasing leads.
2. Underestimating Cash Flow
   Cash is king, yet new owners often think revenue equals survival. Expenses pile up fast—marketing, licenses, unexpected repairs—and if you’re not ready, you’re sunk. A 2024 study from CB Insights pegged cash flow issues as the reason 38% of startups fail.
   Fix It: Build a six-month cash buffer. Overestimate costs by 20% and track every dime. In real estate, this could mean saving for slow commission months or surprise property fixes.
3. Ignoring the Customer
   Too many owners get obsessed with their vision and forget who’s paying the bills. You might love your quirky branding, but if clients don’t get it, you’re toast.
   Fix It: Talk to your audience early—surveys, chats, whatever works. If you’re eyeing a real estate brokerage, ask locals what they want: faster closings? better market updates? Build around that.
4. Trying to Do It All
   New owners wear every hat—CEO, marketer, janitor. It’s noble but exhausting, and quality slips. Burnout’s real; 42% of small business owners reported it in a 2025 Gallup poll.
   Fix It: Delegate ASAP. Hire a part-time assistant or outsource bookkeeping. For a future brokerage, lean on a transaction coordinator so you’re not drowning in paperwork when listings pile up.
5. Neglecting Legal Stuff
   Skipping permits, licenses, or proper contracts can haunt you later. A buddy of mine launched a side hustle. He got hit with a $2,000 fine for missing a local permit. Lesson learned. In regulated fields like real estate, this is doubly true.
   Fix It: Research your industry’s rules upfront. In New Mexico, for example, real estate brokers need to follow advertising regulations or face steep fines. They need to include brokerage info in their ads. Don’t be afraid to ask the professionals. Even if talking to a lawyer is expensive it could be money well spent! My father always told me you are only as good as the people you surround yourself with. I have always made certain that I had a good CPA on hand as well as a lawyer on retainer.

The Takeaway
Mistakes aren’t failures—they’re tuition for success. Dodge these five, and you’re already ahead of the pack. What’s your next move? Drop a comment—I’d love to hear your story.

By Michael Taylor, Permian Real Estate