Firstly, when budgeting for legal fees, think of a number then triple it! Our legal fees were seriously 3 times higher than we had initially expected and not because of our lawyers but because of the landlords. This is something out of your control and purely depends on who your landlord uses. Unfortunately our landlord used some big boy law firm that charged for ever phone call, every email and $5 for every bit of paper they had to copy. We never even realised we would be paying theses costs. Just keep it in mind when your doing your budget and remember to air on the side of caution. Next time I'd even ask if they can estimate their costs. Might help with the shock after I get the bill.
Another one is don't wait until the lease gets to your lawyer to negotiate the terms (obviously there may be some things you have to wait for). If you negotiate with the estate agent until you are happy with the terms, it may save you a lot of money as lawyers will charge you for EVERYTHING. We tried to do this as much as possible but your lawyer will probably spot things that you missed or were well hidden amongst the jargon.
Specifically, some fine details to look out for:
- Yearly rental increases - this may be set as a % or as market review. After speaking with a friend who works in real estate he told me you see rental increases set as little as 1.5% or he has even seen one as high as 10%. Whatever yours is think about what it means for your future, will you be able to pay the rising costs or will the business be sellable 4 years down the track??
- What happens to the fixtures and fittings you install into the business. Some leases include a clause that after 1-2 years your fittings become the landlords and cannot be removed if you default on the lease.
- Are outgoings included in the rental amount and if so what do 'outgoings' mean? Our landlord decided that we would be responsible for any extra costs from the carbon tax.
Anyway after you've ticked, checked and double checked everything, go have a drink to celebrate. This is the real start and is a very exciting time, now get ready for the hard work to begin!