When looking for a rental unit, you don't want to pay more than fair market value. Commercial space is different from residential space and there are a few things you should know before you go "shopping." First and foremost, you need to know how the costs are expressed, and what is involved in arriving at a fair market value for commercial property.

The square footage is generally expressed as dollars per square foot per year. So, if you're looking at a unit that has 500 square feet of space and it costs $6000 per year (or $500 per month), that equates to $12 per square foot per year ($1 per month). Now that you're familiar with that, you can now consider commercial leasing: fair market value for beginners.

1. Determine the fair market value for leasing commercial property for the unit alone. Location and several other factors go into this determination.

2. Factor in the costs of maintenance. When you find commercial lease at fair market value, you'll have to consider two types of maintenance.

3. Add in the cost of any extras that come with the space. Fair market value office space sometimes comes with little (or big) perks.

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Consider the major cost of commercial leasing: fair market value of the unit itself

Location is one of the biggest considerations to determining fair market value for commercial space. Units on busy roads, shopping complexes and high-rise office buildings demand the highest rents; units in plazas fetch higher prices because the foot traffic can help attract business; units with a brand new office complex next door may be advantageous as well, it just depends on how visible your plaza is when people are heading toward the new building.

I recommend: Use LoopNet and Applied Business Solutions to compare market values of units in your area.

Think about maintenance costs in relation to fair market value for commercial real estate

Maintenance costs can refer to one of two things. First, it could refer to common area maintenance (CAM), which is a flat fee you pay each month with your rent in exchange for the upkeep of the breezeways and other common areas in a plaza. Second, it could literally mean maintenance. Units that are in disrepair and spaces that are older have the potential for more problems that may cost the lessee some money, and are therefore priced a bit lower. Many contracts state that the lessee makes repairs under a certain cost and the lessor takes care of major repairs.

I recommend: TenantAdvocate.com explains CAM fees in detail. CAM is often included in a triple net or gross lease; see 1031 Exchange Made Simple for more information on those types of leases.

Get fair market value commercial leasing information for add-ons

There are quite a few extras you have to factor in when looking for space for your business. Parking lots are convenient so they increase the price per square foot. Having a secretary in the lobby or a doorman can make the unit more attractive as well. The best way to find out the fair market value is to compare the prices of spaces without these extras.

I recommend: Check out the advantages of renting a furnished office from OfficeSeeker.com. You can find info on executive suites at CityFeet.com.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Taking a look at the fair market value for commercial space around the unit you're looking at will help you make up your mind. For example, if the space you're looking at runs you $12 per square foot per year and the brand new building next door goes for the same price per square foot, you may be getting a bad deal. Just don't forget to compare apples to apples and consider the location, maintenance costs and extras.
• •  Property taxes, insurance and special zoning can also impact the fair market value. Commercial lease unit owners may require any of these, which may adjust the cost of your lease.

When you’re considering commercial leasing, fair market value will likely be a term that you hear often. A fair market value lease, also often called an operating lease, allows you to use a piece of property or equipment until the fair market value commercial lease agreement ends.

You’ll find numerous benefits to fair market value commercial leasing services. For instance, not only does the leased asset usually not appear on your balance sheet, but you can also find fair market value commercial space without raising overhead costs.

1. Look at fair market value commercial leasing information. You’re going to want to compare it to other leasing and buying options to ensure that you’re saving money for your business.

2. Determine fair market value for leasing commercial property. If you’re looking for a fair market value office space, then you’re going to want to get quotes on how much it will cost you to take over the lease for a commercial property.

3. Apply for a fair market value operating lease. Besides fair market value for commercial property leasing, you can also consider an equipment operating lease.

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Research services for fair market value commercial leasing

You're going to want to collect fair market value commercial leasing info before you choose to send in an application. You can use online templates and calculators to determine which type of leasing or buying solution will save you the most money.

I recommend: You can use the lease versus buy calculator and financial reporting tools available for free on Lease-vs-Buy.com. To make comparisons between buying and fair market value commercial space leases, use the tools on OfficeFinder.

Choose a fair market value for commercial property lease

When you're looking at commercial properties for your business, you're likely going to consider fair market value for leasing commercial property. You can operate your office or business within the space until you lease ends.

I recommend: Conduct a search on Lease MLS in order to locate fair market value for commercial property leases in your area. For additional results, conduct another commercial property search on LoopNet. The site has properties listed for parties interested in both commercial leasing and buying.

Apply for a fair market value commercial lease to finance your equipment needs

If you desire a fair market value operating lease, then you can fill out online applications for quick processing. Once you gain approval, you assume responsibility, but not ownership of the piece of equipment until your lease agreement ends.

I recommend: Through HP Financial Services, you can apply for a fair market value lease in order to meet your equipment needs. Benefits include improvement in cash flow and less financial risk. Chase Financial Services offers a true lease agreement with a fair market value stipulation that allows the lessee to buy the equipment at the lease’s end.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Fair market value commercial leases differ from capital leases. For a capital lease, you make payments to the lessor with owner transference taking place at the end of the agreement.

A fair market value commercial lease is a lease agreement that allows a company to use a property or piece of equipment until the end of the lease. With fair market value commercial leases, you will likely come across clauses and phrases that are new to you. Understanding these clauses and phrases is a vital skill, to get a great lease you need to know what your rights are. Learning the commercial leasing fair market value key terms is a great way to start understanding your lease agreement.

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The best contacts and resources to help you get it done

Off-balance sheet accounting

Off-balance sheet accounting is an type of accounting in which certain company items are left off the company's assets list. Fair market leases are allowed to be a part of off-balance sheet accounting.

I recommend: Investopedia has more information about off-balance sheet accounting. HowStuffWorks also has a information about off-balance sheet accounting.

Step-up lease

A step-up lease is a type of fair market value and one dollar buyout lease. A one dollar buyout is a lease that has the option to buy the leased item for $1 at the end of a set term. With this type of lease, a company agrees to increase payments and the lease goes on, stepping up the payments in set intervals.

I recommend: The Graphic Savings Group has more information about step-up leases.

Step-down lease

A step-down lease is also a type of fair market value and one dollar buyout lease. A step-down lease offers lower payments in specified intervals. A step-down lease is normally set up using a variety of information, including the leasee's sales.

I recommend: Discover more about step-down leases at Lease-Line.

Soft costs

Soft costs are items that are included with a purchase but are normally not recovered if the leasee defaults on the lease. Soft costs include things such as labor, software, freight and legal fees.

I recommend: Hitachi Data Systems has more information on soft costs. Visit Sustainabuild to rind more information on soft costs.

Residual value

Residual value is the expected value of the leased property at the end of the fair market lease. The residual value is the total the leased property could be fixed or restored and sold for.

I recommend: Edmunds has an article that covers residual value. BusinessDictionary.com also has information about residual value.

Loan covenant

A loan covenant is a condition in a fair market value lease, as well as other leases, stating that if the leasee does not follow the guidelines in the lease the lender can consider the lease broken. This can result in repossession.

I recommend: LoanUniverse.com has an online glossary that covers many leasing terms including loan covenant.