There are plenty of perks to being a commercial landlord — you bring in extra revenue for yourself, and you’re providing other business people a brick-and-mortar place to achieve success. But if you want to retain the best long-term tenants, you have to commit to being the best landlord you can be. Just as your tenants have a responsibility to take care of your property and pay their rent on time, you have a responsibility to take good care of your tenants. Whether you are just starting out as a commercial real estate investor or you’ve been doing it for decades, here are some suggestions of ways you can be a better landlord.
Know what you’re getting into.
Commercial real estate investing is a huge responsibility and requires a lot of commitment. If you’re going to serve your tenants and have long-term success as an investor and landlord, you need to have a good idea of how to do it. If possible, try to gain some experience first with residential real estate investing before making the leap to the more complicated commercial market.
Have a thorough lease.
A lease makes everything fair for both the landlord and the tenant. All the expectations are laid out for both of you to agree on. The lease should have all the details you need to know, including monthly rental price, length of stay and options to renew.
Take care of maintenance.
There are some aspects of the property’s upkeep that the tenant will be required to handle, predominantly inside the property. But the exterior, such as the roof or the structural aspects of the building, will be your responsibility. If you own a property with multiple units — such as office suites in a building, or multiple storefronts in a shopping center — then you will need to maintain common areas, such as the parking lot. Tenants won’t be happy if the foyer to their office complex is dirty with holes in the wall, stains on the carpet and dead lightbulbs in the fixtures.
Meet health and safety code.
Some of these are up to the tenant to maintain, but you should make sure that the building is up to code when your tenants are ready to move in. Meeting fire safety regulations, having the electricity properly wired and ridding the building of any asbestos or lead paint are a must. In some cases, this is merely courteous to your tenants; in other cases, such as that of asbestos, you can be penalized for not meeting code.
Make sure the building is secure.
Just as you have to meet health and safety codes, you should also make sure that your property is secure. The doors and windows should have adequate locks, and you may want to provide some kind of alarm system.
Be prepared for problems.
Whether it’s commercial real estate or residential real estate, you’re always going to run into problems. You should have the time and adequate funds to take care of these problems quickly and efficiently so that your tenant is not inconvenienced (and potentially unable to conduct business) for too long. If the air conditioning unit breaks down or a pipe bursts, your tenant is not going to be happy if you’re not answering your phone or if you say you can’t afford to fix it.
Choose the right tenants.
You’re going to have a hard time serving somebody who is not going to be agreeable in return. Contact their references and conduct a background check to ensure that this person is honest and dependable. You want somebody who is going to pay their rent on time, take care of your property and be reasonable in their expectations of you as a landlord. In turn, you will be more motivated to take better care of them. On that note…
This doesn’t mean you need to let your tenants walk all over you, or you need to compromise your end of the lease. Still, remember that your tenants are human beings. They make mistakes. Waiving a late fee for rent or absorbing the cost of a small repair that should be covered by them is not your responsibility according to the lease, but it will go a long way in proving that you value having a good tenant-landlord relationship.
Finally, remember that your tenants are your customers.
As an investor, you are running a business, and to make money, you have to please the people who are paying you for your service. You should treat your tenants as your customers and go out of your way to please them if you hope to retain them. Remember to manage expectations, deliver on your promises, and treat them courteously.