When learning how to rent out commercial property, landlords are often given tips on what to do. But sometimes, advice on what NOT to do can be just as valuable. After all, not all commercial tenants are created equally.

As a commercial property owner, it can be tempting to streamline your tenant-seeking process and cut corners in order to fill your vacancies quickly. But in the long run, quality is more beneficial than speed. When you are able to identify qualified tenants who have a vested interest in your property, the more likely they are to stay long-term and be an ideal fit for your space.

So, how can you be sure that you are covering all your bases and making the right decisions?

To start, beware of the following commercial real estate mistakes. 

How To Rent Out Commercial Property

NOT INCLUDING LATE RENT IN YOUR AGREEMENT

Unfortunately, even tenants who leave you with a great first impression and who seem highly qualified to rent your space, can default on their rent payments. Thus, it is always imperative that late rent payments be covered in every signed agreement.

Without putting this crucial clause in writing, you could be left holding the bag in the event that your tenant is unable to make their payment in full. You’ll want to consider all aspects of your process should rent installments become a problem, including: what the agreed upon rent rate is, what grace period you are willing to provide to your tenant if they are late paying rent (if any), what late charges the tenant will incur should they be late making payment (if any), and what the protocol will be for eviction.

Remember, the more detailed your agreement is, the more protected you will be as the commercial property owner in a court of law.

NOT CONDUCTING BACKGROUND CHECKS

In an ideal world, landlords would be able to take the word of their tenants at face value. Unfortunately, this is not the case.

Even if you have a previous relationship with the tenant who will be moving into your unoccupied commercial property, it is always in your best interest as a landlord rep to thoroughly investigate anyone who will be renting from you.

Sure, paying to have a lawyer conduct a bankruptcy and asset search may set you back a few dollars in the short term, but ultimately it will protect your investment. After all, nothing will impact your bottom line more than having a tenant default on rent because they are financially unable to keep their business afloat. Better to be safe than sorry!

NOT SPECIFYING INSURANCE REQUIREMENTS

It is essential when learning how to rent out commercial property that landlords recognize the importance of ensuring proper protections are in place. One of the most dependable ways to do this is to include a proof of insurance clause in your leasing agreement.

What does a proof of insurance clause entail? Simply put, it means that your tenant  is required to provide you, the landlord, with proof that they have obtained all necessary insurance policies.

Coverage that landlords should consider adding to every lease agreement include:

  • Professional liability insurance.
  • Property insurance
  • Workers’ compensation insurance
  • Product liability insurance
  • Vehicle insurance
  • Equipment breakdown insurance
  • Crime insurance

Remember, if your tenant does not secure the proper insurance coverage for their business operations before they move into your commercial rental in San Francisco, you could be forced to foot the bill should anything go wrong. A situation every commercial property owner would prefer not to experience!

Interesting in learning more about how to rent out commercial property? Contact one of our real estate specialists today!

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