Would you buy a lot and lease if....

[yasir]

....you have couple of interested parties in renting the space...
I recently built an 11,000 sq feet office with 4000 of it to be leased.The problem is i have 3 parties interested in leasing it with one wanting it all...Now there is still one lot available to purchase happens to be right next to mine in a rapidly growing part of the town.....So now my question is,would you entertain buying this lot and building an office 6000 sq feet of which 4000 would be to accommodate these people..If done right i should have my mortgage taken care of just from these two units...
Plan is to just build the structure and let them finish it off and secondly to sign a contract for altleast 5-7 years to cover my build cost...
Any suggestions

You need to review the financials and credit for the prospective tenants. How tight is your lease doc? Do you have a broker working the deal? Can you cover the costs if all lessors go tits up?

Lots of variables.

[yasir]

Originally posted by Mark Wilson
You need to review the financial and credit for the prospective tenants. How tight is your lease doc? Do you have a broker working the deal? Can you cover the costs if all lessors go tits up?

Lots of variables.

One possible tenant is a local Dentist and the second one is the " Quest diagnostics " a national chain so both seem to be the right kinda people...If i can have them sign a lease agreement where if they terminate earlier they would have to pay me their agreed upon amount then i don't think the deal can go wrong or can it ?
Btw what do you mean by "how tight is the lease
Anyways no broker yet but then i have no idea what role they play either,any suggestions..
Thanks....

[Dantilla]

Sounds like a great idea.

Before the buldozer shows up, make certain that your tenants cannot decide to go find existing space instead of waiting for your new building. Quality tenants are important!

I almost bought an office building last year that had enough land to build a second, taller building. To do it properly would have taken more cash up front than I had. I didn't want to stick my neck too far out on the banker's chopping block, and didn't want to just go half-way with a new building, so I let that one go.

Yasir,
There are a thousand ways to write wiggle room into a lease. Default can occur many ways and can allow either party an out. Get good legal council for lease revew and an experienced broker will be able to advise on the business terms and help structure the deal.