Ready for Real Estate: 5 Tips for First-Time Commercial Landlords

published on: December 13, 2017 last updated on: June 14, 2024
Commercial Landlords

Are You a First Timer in Commercial Renting?

There are major chances that you may be taken aback by the financial and regulatory tussles. There may be more extensive challenges coming your way.   

For commercial renting, you must ensure that your property is tenant ready.  

These are some ready for real estate 5 tips for first time commercial landlords that may help you.  

These are expert tips to make the process easy for first time landlords.  

Most experts say that there are some differences between commercial and residential renting. So, while you know the basics already, you must have up-scale knowledge as well.

What Kind of Tips Do You Need?

Renting out a commercial property comes with several risks for you as a first-time landlord, especially when you grant leases without consulting a lawyer.

However, doing it right from the start is crucial to preventing future problems in case your tenant leaves your premises, makes structural alterations without consulting you, or is behind on rent.

So. the core actions pending from your end are: 

  • Choosing the right kind of property, at first 
  • Selecting a property at a genuine and favorable location (no issues like prevalence of theft. Burglary and discord among residents in the locality) 
  • Screening the background of each tenant skillfully  
  • Having all threshold agreements in writing, to avoid any dispute or conflict 
  • Having relations with a reliable contractor to make necessary improvements or modifications in the architecture

Ready for Real Estate 5 Tips for First Time Commercial Landlords

Ready for real estate 5 tips for first time commercial landlords

Here are five considerations to help you avoid commercial property pitfalls as a new landlord.

Formal management and improvements need, before contracting the tenant

There are some basic and advanced parameters to follow, before you start searching for a tenant.  

  • At first, know the property in and out 

The first thing that you must notice is the physical areas in the commercial renting space or building. After that, think which industry or businesses can use that space comfortably.  

Before renting the property, you should develop a schedule of routine inspections. At the same time, you must have a clear record of the conditions, usage and unique specifications.  

No tenant will look after the safety needs of the whole building in detail. So, it’s important that you perform the safety checks voluntarily. 

Check that the entry and exit point are clear. There should also be safety equipment on each floor of the building. We can discuss this point further, under some of the ready for real estate 5 tips for first time commercial landlords. 

  • Making sustainable upgrades to your architecture 

Experts say that you must focus on using green materials and using green construction methods in the first place.  

In the US, most commercial tenants prefer green properties.  

Around 79% customers favor sustainable brands in the US. As a result, most of your commercial tenants will want their workspace to be ecologically sustainable.  

The best thing for you is to make your buildings LEED certified. As a result, you may get 4% more premium on rental charges. Green properties have 17% higher chances of being rented. According to experts, some common ways to make your building greener are: 

  • Installing LED light bulbs to reduce the electricity need 
  • Having a programmable and controllable thermostat 
  • Installing toilets with low flow feature to save water 
  • Low flow in the bathroom sinks  

These steps can also increase the rent value. 

  • Being strict on security 

As the owner, it is your prime responsibility to revamp the security measures of your premises. You must have a camera system in place to avoid sudden break-in or trespassing.  

The need for more security features are discussed in depth in the following ready for real estate 5 tips for first time commercial landlords.  

Also, remember to install cameras in parking lots and in any common area.  

It would be easier to tackle emergent situations with the aid of camera footage.  

In case of emergencies like fire, you use lice camera footage to expedite evacuation in your building.

Carry Out a Proper Background Check on Your Tenants

Ensure you know about your prospective tenant by carrying out a thorough background check of the business. You may go as far as asking for references from previous and current trade creditors or landlords. If it is a limited company, find out who the shareholders and directors are and ask for a personal guarantee before signing a lease. Alternatively, you can ask the tenant to pay a security bond that will be held in escrow during the term of the contract, or to provide a bank guarantee.

Engage with Your Tenant

Usually, most communication between the landlord and the tenant only takes place when there is a problem to be reported, but this is not the best time to build good relations. You need to be proactive and create an opportunity to meet your tenants before problems arise. Get to know them and their businesses, what challenges they are facing, and whether you need to put any preventative measures in place.

Dealing with unexpected problems when they are reported or attending to small issues before they turn into crises will help you forge a good relationship with your tenants.

Provide Safety and Security for Your Tenants

Check your property for safety and security issues because failure to do this can culminate in an injury or accident to a client or tenant or damage to equipment. Lifted pavings pose a potential for tripping; uneven stair treads or loose banisters can cause someone to fall; unkempt trees and branches can drop onto the roof or parked cars, and all these pose a danger to people around the premises.

Ensure you trim shrubbery in the garden, and outdoor areas should be well-lit to deter any criminal activity. The electric or security fencing must be in working condition. Also, consider installing security cameras in areas prone to high crime rates.

Ensuring your property is safe and secure will give your clients peace of mind and they will be happy tenants.

Terms and Renewals

Ensure you carefully consider the terms of the length of the lease and renewals that you are willing to grant. Although you may think it is a good idea to sign long lease contracts with your tenants, circumstances may change, and you may need to redevelop the building. Thus, you need to include a clause in the lease that allows you to end the contract early for redevelopment reasons.

Arrange for Sufficient Insurance

When leasing a commercial property, it is crucial to secure full replacement insurance at all times. Thus, arrange to have an insurance cover that is adequate to rebuild your building in case the worst happens. Then, regularly review the level of protection to ensure it remains sufficient. Usually, your tenant will be responsible for covering the cost of your insurance premiums and other insurance valuations.

Experts also recommend putting a sufficient level of ‘loss of rents’ insurance for your property. You can even pass the cost of this insurance to your tenant as long as you agree on this before signing the lease.

There are lots of pitfalls that can occur to new landlords because of their ignorance or lack of experience, but you don’t have to be caught unawares. The real estate business is packed with challenges. However, following these ideas and performing proper tenant screenings will help you run a successful business and help you enjoy an excellent relationship with your tenants.

Read More:

  1. 4 Things to Look Out For When Assessing a Turn Key Real Estate Investment Opportunity
  2. Why are Real Estate Investments the Smartest Ones?

Ariana Smith

Ariana Smith is an enthusiastic fashion blogger and freelancer content writer. She loves to write and share knowledge of the latest fashion trends, fashion, and shopping tips and tricks. She is the chief editor at FollowTheFashion.

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