We know that an investment in commercial property can be an extremely lucrative one if done correctly. While being a commercial landlord can have some nice financial perks, the job can be very involved.
Being a commercial landlord involves more than just making a contract with a tenant, and assuming both parties will keep up their end of the bargain. It’s much more complicated than that. It’s a business deal that also needs to be treated with special care.
You need to make sure that you know everything about owning a commercial real estate investment. The legalities alone can be a bit overwhelming for someone new to the process. You need to make sure that you’re covering all of your bases to protect your investment and your bank account. If things are done poorly, it could result in missed rent from tenants or worse, a lawsuit.
When choosing tenants, you need to be cautious. It can be tempting to choose a tenant based on money alone or even “first-come, first-serve.” You may be eager to get a tenant in your property and want to take the first person who seems decent and applies. You might also be tempted to take the tenant that offers you the most money upfront. But being patient can reward you in the long run. That’s why establishing a thorough and accurate screening process is so important. Sure, it’d be nice if you could take everyone at face value, but that’s not the world we live in.
Instead of rushing through the lease process, take the time to do your research. There are several things you can do to make sure you cover all your bases, including:
- Checking your applicants’ credit scores
- Running criminal background checks
- Verifying income and employment
- Asking for references from a tenant’s previous landlords
- Researching their history of eviction
Although these steps may add a few days or weeks to the leasing process, it’s absolutely worth it. When you do your research, you have enough information to make the right decision.
When creating lease agreements and preparing for a new tenant to come in, be sure that your lease agreements are robust. They should include all pertinent information, including the eviction process. For example, outline what could cause an eviction. Make sure all of your rules are covered in the agreement. You’ll also want to make note of the current conditions of your property. Take pictures of what it looks like before a tenant rents it out. Keep any important documents together, to make sure you’re covered if a problem should arise.
After you’ve made an agreement with a potential tenant, make a point to foster that relationship. You may think this is strictly a business deal, but it’s more than that and that mentality could hurt you. Fostering these relationships can help you keep tenants pleased and encourage them to continue renting space from you. It can also be beneficial if the company is doing well and wants to grow. They may come to you first to see if you have a larger property available for them to rent out, if you’re open to building out, or if you want to purchase one with them in mind. But, if they’re not happy with how you are as a landlord, they’ll be more likely to go and find another property owned by someone else instead.
You can foster these relationships by showing tenants respect. Be pleasant with them and easy to get a hold of. Make sure that the property they’re renting stays in good condition. If your tenant presents a maintenance issue, don’t wait on it or ignore the calls. Reach out to them as soon as possible and get the problem handled. This not only looks good to the tenant, but it also allows you to maintain your investment. Because a properly maintained investment property not only helps you get and keep tenants, it also has a higher resale value.
Of course, if you do end up with a tenant that presents issues, such as not paying rent on time or causing damage to your property, you will need to handle it correctly. If you own a commercial property, such as a strip mall, you need to make sure you’re treating each tenant the same, so no one feels like they’re being discriminated against. This is why it’s so important to have all of the rules laid out clearly in the lease agreements and that you follow through as laid out in the documents.
We understand that owning commercial real estate can be a lot of work. But, we’re here to make it easier for you. We can help ensure you get the right tenants in your property as well as make sure that all laws are followed and that everything is included in your lease agreements. Contact us to learn more about how we can help you succeed: https://www.propertymanagementinc.com/.
