5 Ways to Vet Potential Commercial Real Estate Tenants
Don’t expect landlords to rent out their commercial space to the first tenant who puts in an offer. In many cases, landlords have a lot of variables they consider when deciding to accept an offer to lease. This can include things such as background checks, reviewing tax returns, credit reports and references or even just connecting personally with a tenant. Here are five ways to vet a potential real estate tenant.
One of the first things commercial landlords are going to look at when a company submits an offer for a lease is financials and credit history. Landlords need to see that the company is on solid financial ground and will be able to afford the rent for the life of the lease.
Look at Business Plans
The next thing a commercial landlord will look at from a potential tenant is their business plan. Landlords will need to see that they have done their due diligence and have prepared a well-crafted business model that will thrive in the area they wish to lease in.
Think About Co-Tenancy
Will the business concept compliment the other existing tenants in the building? It’s vital that the prospective tenant vibe well with the other businesses in the building. Things to discuss are the demographics the business is looking to attract, what specific products they offer, what the business hours are and how much the product costs.
Do Research on the Business’ History
While it is important to have a solid business plan, a landlord will also want to see proof that the company has the experience and the skills to back up the business plan and put it into action. The key to ensuring that you are leasing a space to a quality tenant is to do research and talk to the potential tenant about their plans and goals and the history of their company.
Will the Tenant Be Cooperative?
You certainly don’t want to lease space to tenant that will become a problem for property management to deal with. The commercial landlord will try to determine if a tenant is going to be cooperative and easy to work with by contacting the tenant’s previous property managers at their former space and by personally connecting with the tenant to get a feel for their personality. Landlords want their tenants to hype up their space and increase the morale – not cause issues and create extra work for the property management to deal with.
These five ways to vet potential commercial real estate tenants will help landlords increase their chances of leasing to quality, qualified tenants that will enhance the property. Don’t make the mistake of leasing space to unqualified tenants who do not have successful business plans and do not have the healthy finances to see out the term of the lease.
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