The key to commercial property success is delivering the right income multiple which secures the long-term value of your asset. Ultimately this result is directly impacted by your choice of tenant(s).
A Landlord’s ability to influence and attract the right commercial tenant, can also improve an insurers appetite, and in turn premium rating, for Commercial Property Insurance.
The following tips can help to reduce cost, maximise return on investment, through a clear and direct relationship with tenants and prospective tenants.
#1 Property Maintenance and Condition
Keep your property in good condition. Make sure it is clean and tidy and that everything is up to date and in good working order.
Set rent at a rate comparable to similar properties in the area. It’s good to have some room for negotiation, but asking too much may deter desirable applicants from considering your property.
#3 Tenant Referencing
Conduct proper tenant referencing to determine their credentials. Do not rely on their word to validate their background and credit history.
Remain patient as you conduct tenant referencing. Since removing bad tenants is quite costly, remaining patient for a good tenant is worthwhile.
#4 Maximise Space
If you are having problems renting a larger property, consider if it would be beneficial to adapt it into multiple smaller spaces.
Consider any vehicle access needs a potential tenant may have. Find out if they need parking and if what you can offer is enough. Also, ask about any large volume delivery needs that may require places to load or unload vehicles without disrupting traffic or other nearby businesses.
#6 Current Tenants
Consider the impact on the current tenants or neighbours of renting to a potential tenant. Will the potential tenants cause a noise disturbance? Pollution? Conflict business with current tenants?
#7 Length of Agreement
When choosing between prospective tenants, keep in mind how long of a fixed term they are willing to agree to. Long-term tenants save you the trouble and expense of having to find new renters, and they also give you more consistent cash flow.
#8 Clear Responsibilities
When renting out your property, make all tenants sign a lease/commercial tenancy agreement. Outline who will pay for utilities, take care of snow removal, maintenance duties and similar responsibilities.
Include the insurance requirements of both parties, such as the landlord’s responsibility to insure the building and premises as well as the tenant’s responsibilities to insure all contents.
#9 Property Management
If you have multiple units, it may help to hire a property manager who can conduct tenant referencing and keep the property in solid working order. This will take some of the burden off you and will make them the point of contact once the property is rented.
#10 FRI Lease
Under the terms of a commercial lease, it is common place to make your tenant responsible for the cost of your Commercial Property Insurance. An FRI (full repairing and insuring lease), sets out the tenants obligations clearly.
However, it is best practice to monitor maintenance programmes carefully to ensure that your asset is being protected. In terms of the insurance programme, by arranging competitive cover, you will avoid potential disputes with tenants which can sour relationships and impact tenant attrition rates.
FREE Insurance Review
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You can request a quotation online, alternatively, why not book a free review with one of our expert Gurus who can help you find the right level of cover at the right price.