If you are planning to lease a commercial property, it is very important that you know how to screen commercial tenants. The tenants that rent your commercial real estate, or part of your property will have a big impact on the success of your investment. You need to have reliable tenants who will pay their rent on time, look after your property and be reliable.
What should you know about how to screen commercial tenants?
Meet With the Potential Tenant
First impressions are important. Of course, they will not tell you everything about the tenant, however, the impression you get can be a good indicator. Approach the meeting just like you would approach an interview with a potential employee. Be aware of their body language which can be an indicator as to their trustworthiness.
Remember that this is just an initial first impression and you certainly can’t tell everything from it. The next step is the most important to screen commercial tenants.
The Application Form
If the prospective tenant is interested in renting your commercial property, you should ask them to fill out a rental application form. This is not a binding contract.
The rental application form will allow you collect specific information which will help you screen the prospective tenant. A typical rental application will ask for the following information:
- Legal business name
- When was the business established
- What is the business type?
- Rental history
- Financial information
In addition to that information, you should ask about who are the expected customers of the business. For established businesses, you can ask to see their financial statements for the past 3 to 5 years. However, if this is a new business, then you need to check over their business plan. If other parties are guaranteeing the lease, then ask to see their financial statements also.
Screen Commercial Tenants
With the information from the rental application, you can now properly screen your prospective tenant. The screening process for commercial tenants is not as straightforward as for residential properties; therefore, you should use a trusted commercial tenant screening service.
It is essential to properly screen all potential commercial tenants. This helps you to ensure that your tenant has a good history of renting properties and that he is in a position to fulfill his financial obligations to you. You should also know about the commercial tenancy act.
