Renting out your commercial property can be a rewarding experience and a great source of income, but it’s not without its own challenges, especially if you aren’t careful. Thorough preparation is the key to avoiding conflicts with your tenants and with the law.
Here are some guaranteed tips you can use to protect not only yourself as a landlord, but your business and assets, as well.
Plan ahead for default payments
You and your renter should go over your rental agreement, and it should be made clear that if the renter defies any stipulation, you might have to take legal action against them.
If a tenant fails to properly compensate you for the services you are providing, you have the right to retrieve overdue rent. As a business owner, you should be firm but fair. You can work with a reputable and reliable commercial rent recovery service to guarantee that you will be able to recover what is owed to you as well as protect your assets and business interests.
Vet your tenants’ background
A responsible landlord should take it upon themselves to properly inspect the backgrounds of their clients. This will save you the headache of having to deal with difficult tenants later on. A credit check can validate the financial status of the tenant, as well as reveal their prior rental history and obligations.
Review your tenant’s business plan
Besides surveying your tenants’ background, it’s also important that you go over the tenant’s business plan before you decide to enter into a commercial real estate lease with them. Reviewing their business plan ensures that their business complies with regulations and restrictions in the lease.
You can also assess whether or not your location is suitable for the business that the tenant proposes. You do not always have to accept every rental application that comes your way; there will always be clients who are better suited to your space.
Request for a personal guarantee
A personal guarantee from the tenant guarantees the security of receiving what they owe you and any other expense that they incur during the period of their lease. If the tenant’s business fails, you’re sure to be protected. Securing a personal guarantee and a financial background check will ensure that the tenant has the finances to compensate you and support their guarantee.
Require a security deposit
Security deposits will encourage tenants to take better care of your property in order to get the deposit back. Therefore, it’s in your best interest to require it, even if it isn’t required by law. You can also deduct a sum from the deposit if the tenant does end up damaging your property. This will also guarantee that you are protected should the tenant default on their rental payment.
It’s not easy being a landlord, but being smart, assured, and well-prepared will definitely guarantee that you will foster plenty of good working relationships with your tenants. Hopefully, these tips will help you navigate the tricky parts of the business.