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FIVE TIPS FOR SECURING THE RIGHT TENANT FOR YOUR PROPERTY
Finding a reliable, stable and long-term tenant for your commercial property is important. It helps keep your investment safe, secures an ongoing stream of income and may even reduce complaints and build your reputation as a landlord. So what should you be looking out for and what else do you need to know? Here are five tips to help you secure the best tenant for your investment, brought to you by the team at TGC.
1. Carry out due diligence
Before you rent out your investment, it’s important to know who you’re renting to. Conducting simple background checks by way of application forms, references, credit reports, face-to-face interviews and market or online research can help you reduce your risk and answer any questions you have. It’s also essential to:
- Review a copy of your potential tenant’s certified assets and liability statements to help determine how solvent they are.
- Understand your potential tenant’s proposed fit-out of the space (including signage).
- Incorporate a ‘make-good’ – a clause requiring that your property is returned to its original condition – into your contract.
- Evaluate your potential tenant’s long-term business plans.
- Consider other retail businesses in your area (if it happens to be a retail space) to help avoid market saturation.
2. Find out how the potential tenant intends to use the space
Try to get an understanding of what your tenant wants to use the space for and the number of people (and types of people) that will be passing through. All commercial agreements incorporate a ‘use clause’, which defines the activity that the tenant can engage in on the premises, based on council restrictions/zoning. Usage may be changed by lodging a DA with the council. Knowing in advance what your tenant intends to use the space for is also important as depreciation and wear and tear tends to increase relative to the number of people who pass through. And because the type of occupants leasing your space may affect vacancy rates within the same building.
3. Don’t rush
While vacancies can be stressful, it’s important not to rush your decisions. Be careful to make sure that new leases match your investment objectives and remember to consider other factors that may affect the quality of your decision (such as how well the proposed tenant fits the business profile of the building).
4. Present well
A well-presented property usually attracts a significant number of high-quality applicants. So keep up appearances – make sure your property is clean and well presented, and invest in good quality paint, carpet, lighting, amenities and fit out to maximise your chance of attracting (and keeping) the right tenant for your space.
You should negotiate a lease that satisfies the needs of both you and your tenant, paying particular attention to the market that your tenant is working and competing in. Offering an incentive to make your property more attractive for ongoing occupancy is also commonplace in the current market. Be aware of what other landlords are offering in order to stay competitive. Currently, most tenants are offered around one month per year of the lease, for leases three years or longer.
Remember: a good tenant can be more valuable than high rental yields – at the end of the day if your tenant has a problem you do too!
Ready to find the right tenant for your investment? Talk to one of our agents today. Call 1300 458 800.