If you want a smooth professional relationship with commercial tenants, you must clearly define the terms of your lease. These terms are part of the lease management strategy.
Lease management is an umbrella term that covers a range of responsibilities.
Services include:
- Negotiations
- Renewals
- Legal services
- Contract customization
- Tenant incentives
- Documentation delivery
Lease management even plays a role in property marketing. In fact, a lease contract is a make-or-break moment for many prospective tenants.
Let's delve more into the details of commercial leases.
Start With Tenant Procurement
Think about your ROI on commercial properties. You'll notice that long-term tenants yield a higher percentage. They save you from investing more money into tenant procurement, like screening and marketing.
Commercial tenant procurement is different than residential tenant screening. However, the common thread is financial stability. Prospective tenants must prove they can cover rent prices.
Look for the following qualities in a financial background check:
- Rent deposits
- Bank statements
- Proof of income
- Proof of sales
- Loan documents from financial institutions
Avoid financing new tenants' deposits or the first few months of rent. Even if you draft up a new contract, you'll risk major profit losses. Always go with tenants who are ready to pay their deposits and have months worth of rent lined up.
Screening goes beyond financial statements. Always check leads' histories with past commercial building owners. This will give you a clearer picture of past tenant-landlord relations.
Of course, you'll need to check national databases for any past criminal history.
Going through the above processes is critical for lease enforcement. Have lease contracts ready for tenants to help them make informed decisions. They, too, should have lawyers present to go over the contract terms.
Lease Management Requires a Legal Team
One mistake commercial property owners make is creating their own lease contracts. Many details fall through the cracks. You need a legal language that binds tenants to terms, making them subject to legal action if the terms are breached.
Talk to your legal team about including arbitration clauses, as well. Arbitration helps commercial real estate investors save money on potential legal matters with tenants. You also need to understand the terms of eviction as determined by your state.
Lease Delivery
Have your lease on-hand when showing commercial properties to potential tenants. It's best to hire a property manager to handle this part for you. They're experienced in marketing and showing properties to leads.
Quality tenants may be able to sign leases on the spot.
Property management companies also deliver lease contracts digitally. New tenants may have their leases sent to email, providing a digital signature. Digital leases are great for out-of-state tenants looking to expand their business to your location.
You can also secure more lease renewals with digital tools. Simply send new lease agreements via email well before the current lease expires. Digital contracts can be easily updated to include tenant incentives like interior upgrades or discounts.
Optimize Your Leasing Strategy
Do you want to increase the profitability of your commercial property portfolio?
Save money on tenant procurement, marketing, and turnover by investing in a lease management strategy that generates renewals.
PMI Columbus has the tools and expertise to streamline a better lease strategy. Learn more about our commitment or call us today to book an appointment.
