How To Fill A Lease Agreement Houston: Fill & Download for Free

Around the turn of the millennium, a man I know purchased a house atop a hill with his wife and children. The house was very near the intersection of two major roads — one that goes to Houston; the other that, depending on which way you turn, going either to Austin or Dallas. — These are the major cities of Texas; however, this house atop a hill and this intersection were not in a major city of Texas.Soon thereafter, the man had the opportunity to buy the road frontage from his home all the way down to a big tract of old family land which, thereafter, would be the city limits sign. — It was a significant amount of money to buy this, and his wife asked him, “Why do you think we need this land?” — He answered, “For our kids.”Half a decade later, the city’s school district decided they wanted to do away with some older elementary school buildings and the old kindergarten building; they would unite all of these into one new primary and elementary school building.The place they would put this new construction would be on land donated from the “old family” on the frontage bordering the end of this man’s land purchase. — By old family, I mean that these people — you’d know them by their last name. Founding members of the community; long-time landowners. That kind of thing.They donated the road frontage land to the school district, and in exchange, the new school was named after them. — Eventually, an issue floated to the top. The school needed some of the man’s (from now on, I’ll just call him “Hal”) land to round out the property on which the new school would sit. — They low-balled Hal, and he refused to sell the five acres, or whatever small amount of land it was, to the school district.Hal was, then, a city council member, so you had a dispute between members of the school board and a member of the city council — the former, in their official roles; the latter, in a personal role. It made news across this area when it became known that the school district was going to sue to condemn these few acres of Hal’s and then convert the land for public use under the principle of eminent domain.The school district would win this case. The dispute between the two parties was on what was fair compensation to Hal for taking his land.The complication was that Hal knew, on the other side of the school’s new development, the school district had paid a man, for a very similar parcel of land, in acreage and state of that land, $15,000 per acre.The school was only offering Hal $5,000 per acre. — He balked at this, and they were set to go to trial the day after on the day the school’s superintendent came to Hal’s office in an effort to make a deal and stay out of court.Hal’s offer was $10,000 per acre and that they would extend the utilities, under and across the highway, from the opposite side. The school district had already been doing this in order to get utilities to the new school they were building. — The superintendent agreed, and they stayed out of court.Hal received around $50,000 in cash and had utilities run across the highway.I think he’d only paid $65,000 for the entire frontage tract when he’d bought it, and that was a significant amount of land; he was only selling the tail end of it. So, he’d now been paid back the majority of his principal, and now he had the ability, more directly, to develop that land because he had access to utilities. — If he had paid to have the utilities run under and across the highway, it would have cost tens of thousands of dollars.Within a couple of years, a health clinic expressed a desire to build on his land. They would be building from the ground up and putting in a parking lot, and they would sign a lease agreement with Hal to lease it all for ten years, with the ability to extend that lease, on like terms, for another ten years at the expiration of the original lease agreement.The deal was that Hal would build the “shell” of the building and the parking lot, and they would finish out the interior.As Hal owned a construction company, he could do this himself; he didn’t have to hire anyone to be a general contractor on the project. And, the tenant was funded, in a major part, by a federal grant, so the likelihood the tenant would default was very low.If you know anything about commercial real estate, you know that certain improvements to a structure become the property of the owner of the shell building once the tenant affixes them to the walls.The walls are a good example. — If you put in walls and a ceiling, you can’t take those with you when you leave. Just like you can’t take the electrical, HVAC, plumbing. — You may pay for them, as the lessee, but they become the property of the lessor once you affix/install them.In like fashion, if you use a grant to put in a concrete parking lot, you can’t take the parking lot with you when you leave.For around $100,000, Hal gained about $300,000 worth of improvements. — Both would appreciate in value over time, and as part of the tenant’s lease agreement, they would have to pay for the property taxes — all of them — for as long as they leased the property. Even if they went up in value.A decade later, it was time to renew their lease. This allowed for a modification (upward) of their base rent, and to put in a clause that would allow Hal to charge more base rent every year as a form of cost-of-living adjustment. Each year, the base rent would rise by X% over the base rent of the year before.The tenant could reject this, or fight for better terms, but they didn’t. — They were government-funded, so to an extent, increases in costs just meant increases in budgets and money requested for operations.Within a year, the CEO of the clinic was calling expressing that they’d pretty much outgrown their current square footage and wanted to expand for medical patients, and they were asking for a new grant to put in a dental clinic.The difference this time was that the grant would pay for all of the costs of new construction and remodeling. Hal would not have to pay anything out of pocket. They would still have to pay rent, because it was on his land. And, whether they knew it or not, once it was built, it became his property.It would either be affixed to something that already existed, or it would be immovable property sitting on his land.And, even though the clinic would have to (and did) solicit bids for the new construction, they wanted Hal’s company to build it.Without even trying to be the lowest bidder, but as a function of being the local contractor and, by then, owning his own concrete plant, Hal was the lowest bidder.So, he got to do the remodel, build the new structure, provide the concrete for the new parking areas, and pay for the finish-out of the concrete.He’d get paid to build the building that would end up being his.Once everything was constructed, he’d added another $400,000 worth of property, which was his, despite not having to pay anything to build it.And, he could charge the clinic rent on the initial structure and on the new structure.With an initial investment of $100,000, and in a little over a decade, he had passive net income of $30,000/yr to $40,000/yr, and the building and improvements (that were his) were valued, conservatively, at or around $900,000.When you factored in that it was leased out, pretty much in perpetuity, with an ever-increasing, year over year, base rent increase, the income aspect of the property had a present value of a very large amount as well.He used the income from this property to develop the rest of the frontage tract from that house atop a hill to the school. — That development was possible only because the school agreed to extend the utilities across the highway.The original clinic building’s structure was built using materials he reclaimed from a job that was partially a barter trade. The customer wanted a building torn down; he’d offered to tear down the building for next to nothing, if they would let him keep the structure steel materials. — That customer agreed.Those materials are now part of a building he owns on this tract.—Because much of this land was a giant ditch compared to the level of the roadway, he had to bring in dirt and roll and pack it until it came up to ground level. — This is part of the idea of why the school district could call it condemned.Sometime in the past, Hal had found a customer who needed some work done but had little money. What he did have, though, was a giant hill of topsoil on his property that he didn’t want. — He wanted the hill removed so the land would be leveled out.Hal told him he would do the work, but he wanted the topsoil. Sometime in the future, he would come back and remove that giant hill of topsoil, and the customer allowing him to do this would be his payment for the work the customer needed done then, which he would do for “free” for the moment.The customer got something of value that he needed, and then, eventually, he would get his land leveled out, and Hal would get the topsoil of the giant hill, eventually, whenever he needed it.When it came time to fill in a giant ditch, it would take a mountain of topsoil to do it. — He already had that.Over the years, Hal had done jobs strategically that would give him the opportunity to develop this tract of land. He was not originally a developer; just a local contractor.His dedication and hard work made him a millionaire, and this is how he did it.