Commercial property can still be an excellent investment. You do, however, very much need to stay on the top of your management game. Going forward, you’re going to be competing not just against other commercial properties, but also against working from home. With that in mind, here are five tips for successfully managing commercial property.
Implement rigorous tenant selection
This is one area where managing commercial properties is exactly the same as managing standard residential lets. Vetting your tenants thoroughly before you decide whether or not to accept them, let alone on what terms, can save you a whole lot of time and money further down the line.
It’s very much preferable for you to be able to demonstrate that this screening process was carried out in full compliance with the law. In particular, you would want to be able to show that you did not discriminate against a prospective tenant on the basis of protected criteria. For this reason, it can be best to undertake this process with experienced property management help.
Get the paperwork in order
Technically, this is true of residential lettings as well. In practice, however, it’s a lot more significant for managing commercial properties. With residential tenants, you can generally set very firm limits on what they can do in their homes. For anything else, they call you. Commercial tenants, by contrast, usually want, even need, more leeway.
This means that you need to be very clear about who has what rights and responsibilities. You also need to ensure that you have evidence to show that you have fully complied with your duties as a landlord. Again, this is also true of residential properties. It is, however, often even more important with commercial properties as the potential impact is greater.
Make sure you cover subletting
Strictly speaking, this is covered by the previous point but it’s important enough to be worth mentioning on its own. Subletting is far more common in commercial property than it is (officially) with residential property. That needn’t be a problem as long as you’re protected.
Manage the deposit carefully
Landlords may find themselves walking a fine line between being reasonable to their tenant and leaving themselves exposed to default. This can be another area where it can be helpful to get professional advice.
On the one hand, tenants may retain a high degree of legal (and ethical) protection until COVID19 really stops being a consideration. On the other hand, if a tenant goes into administration, their rent may be protected but their deposit may not be restored to what it was. This can leave the landlord out of pocket if there are dilapidations needing to be corrected.
Touch base with your tenant regularly
Combine property inspections with tenant communication. This is a double helping of “a stitch in time saves nine”. Firstly, it will allow you to catch any issues at an early stage. Secondly, it will allow you to build up a good working relationship with your tenant. If they’re good, you want to encourage them to stay for as long as possible.
Remember, while commercial tenants are often very price-sensitive, they also tend to understand the difference between price and value. If you’re a great landlord, they may be more willing to stay with you even if your price is higher than the competition.