Tenant Screening Best Practices: Finding Quality Tenants for Your Commercial Property

Tenant Screening Best Practices: Finding Quality Tenants for Your Commercial Property

Riverside County has over 21,000 small businesses, making it a great place for commercial property investors to plant roots.

If you're one of these commercial property owners, you may be wondering how you can secure great tenants. The Covid pandemic highlighted just how fragile the world of commercial real estate can be when faced with a serious dilemma.

For your investment to remain fruitful, you need to find a tenant who can provide you with security and keep your vacancy rates down. The best way to do this is with a thorough tenant screening process.

In today's post, we'll explain some tenant screening best practices. Keep reading and you'll understand what tenant screening criteria to prioritize to find a long-term commercial tenant.

Look at the Business Plan/History

With commercial tenants, you need to first look into the history of the business. Find out how long they've been in operation and pay special attention to their growth over that time. A good commercial tenant has stability and steady growth over many years in business.

At the same time, you may be screening a business that's just opening up. In this case, take a look at their business plan. A business plan is a detailed description of every facet of the business, along with various projections.

Perform Credit Checks

Next, you'll want to perform credit checks on the business itself. A business credit bureau will give the company a score between 1 and 100 with 100 giving you the most financial reliability.

Whether you're dealing with a new or established business, you should always check the company owner's credit as well. A business owner's credit score should always be above 700, or else you can't be sure that they can handle the financial responsibility of renting commercial property.

Background Checks

Background checks on business owners can tell you a lot. You may learn about criminal history, driving records, military service, employment records, and bankruptcies, among other things. Not all of the information is pertinent, but it can help you determine if the company owner is someone you want to work with.

Contact References

Lastly, you must always contact a commercial tenant's references to get a sense of who they are as a company and as people. The best references for an established business are former landlords. Being able to question their former landlord about responsibility and respectfulness is one of the best tenant screening criteria.

Another good reference is a bank/lender. If you're dealing with a new business, a moneylender can verify that they've got the capital to rent your commercial property.

Getting Help with Tenant Screening

Tenant screening for commercial properties can feel like a lot of work because it is. That said, it's worthwhile work because it promises that you'll find a tenant who'll be with you for a while. Good commercial tenants can keep money coming into your real estate investment for years if not decades.

To get help with commercial tenant screening, you should hire a property manager. PMI Riverside is one of the top property managers in the Inland Empire and part of the top property management group in the country. To learn how we can help you with screening and other aspects of property management, contact us today.