In October 2025, this month, my client closed the purchase of a commercial property worth approximately $1,650,000 in southwest Houston.  Negotiations took approximately 3 weeks, because buyer and seller were sometimes traveling.  Neither buyer nor seller appeared motivated, but they were.  The broker representing the seller was professional and helpful.

There had been other purchase offers from other prospective buyers.

My client made a cash offer which therefore was not contingent upon getting a loan with a reasonable amounts of earnest money and the option fee to buy the right to terminate during feasibility and inspections.

My client buyer immediately had a tenant for the property at a fair lease rate for 5 years.

The lease contract is promulgated and approved by the Texas Real Estate Commission and Association of Realtors. It provides that the tenant pay a monthly base rate plus a rate for property ad valorem taxes and hazard insurance and common area maintenance, referred to a CAM.

CAM, common area maintenance are paid by tenant each month plus the base rent amount. This monthly CAM payment is to pay for the  normal operating expenses paid by the owner.

The problem is that rent payments do not pay for Major Future capital expenditures such as Roof replacement Nor building foundation repairs.  Both may seldom happen but they are expensive large amount of money. A roof may cost $4 per square foot, thus can be between $20,000 to $100,000 depending on the size of the building.  Foundation repairs can cost $250 a foot to dig under a foundation. It may cost $400 per pier footing placed each 4 feet under the concrete slab.  A foundation repair on a small building might cost $10,000 to $20,000 or more.

Houston was built on mud. Thick dark grey gumbo soil. Every building will eventually need foundation work.  The gumbo clay soil imbibes water then dries, thus the foundation moves each dry or wet season.

I devised a method for the tenant to pay for Future Major Capital Expenditures.

The lease requires that the tenant to pay 5 cents per square foot of building each month, into a Sinking Fund (no pun intended).  Thus a 15,600 square foot building would monthly pay  $833 to landlord which is required to go into a separate saving account.  Each year the amount paid into the Sinking Fund is $10,000, thus after 5 years the fund has deposited $50,000.  Roofs and foundations are expensive to maintain.

Normally, owners do not easily find the funds and may try to sell the building.  They would get a higher price if he building is in good condition to sell or lease.  It is like trying to sell a car with faulty transmission.

Phone me to discuss at  2812368189 your building if you are about to negotiate a new lease.