As the economic recovery from the Great Recession of 2008 continues to chug along, opportunity for investment remains high. Individuals are taking on ownership of investment properties both in single-family housing and small unit apartment complexes, and small unit commercial properties.
Renting and Leasing commercial units is not unlike renting and leasing a family unit. Both investments can be made at a reasonable cost and both investments can bring financial reward.
With commercial and residential rental properties the key to profitability relies on one simple fact: Long-term renters.
Constant turnover of units creates serious challenges. First and foremost, an empty unit draws no income and, after all, the point of an investment is to make a profit. Secondly, empty units invite potential vandalism, especially in commercial properties. And, finally, empty or high turnover units can create a negative perception of a given property.
Many landlords and property managers of residential properties conduct tenant checks on all new tenants. They know that a thorough tenant screening can assist in selecting a financially sound, potentially long-term resident. Further, tenant checks assist in creating a safe environment for the community as well. Long-term residents enhance a community and can lead to becoming a desirable living environment for others.
The same holds true for commercial properties, especially smaller properties where the owner may act as property manager to hold down cost. Tenant checks can be conducted on the principles of any small company wanting to move into a unit.
There are a number of screening reports that can be optimized in conducting a commercial property tenant screening.
- County Criminal History – Provides conviction information, by county, on principle owners of a given business.
- Evictions – Combined with Reference Verification, an eviction report could provide critical information for a potential commercial tenant.
- Bankruptcies, liens and judgments – These reports will review information on a national level.
Of course Consumer Credit Reports and Sex Offender Registry reviews are helpful, if not obvious reports of value.
When an investor makes the decision to purchase a small unit commercial property they should keep in mind the same principles as a residential landlord: Risk management. Tenant screening is the key component of risk management and just as a residential landlord wants to create a safe environment and financial security with long-term residents, so too does a commercial property owner. A long-term renter can lead to a safer community and attract other potential long-term residents, ultimately creating a lucrative financial return. Tenant screening is an important tool in creating this reality.
TenantScreeningUSA.com is a third-party background screening company specializing in tenant screening both for residential and commercial property owners. They specialize in working with owner/operators of small unit commercial properties. Visit TenantScreeningUSA.com to assist in creating a Commercial Property Tenant Screening package.
