Investing in commercial real estate is an amazing way to skyrocket your net worth. However, this opportunity comes with a hefty price tag. The average price per square foot for office spaces is around $35.
Finding a tenant for your commercial space is only half the battle, though. You'll need a lease enforcement policy to ensure that they adhere to lease terms and avoid compliance issues. Let's discuss what commercial property managers should consider when ensuring lease compliance.
Clearly Outline the Lease Terms
The most effective way to ensure lease compliance is to make your lease terms as clear as possible. The lease should definitively outline areas of concern and tenant expectations.
For example, your commercial lease may have a section about certain prohibited activities. These can include structural renovations, running a manufacturing operation in the building, etc.
Your lease should also include information about termination. In the event that the tenant breaches certain guidelines, you have the authority to terminate the lease and give the tenant notice to vacate.
Lease terms will vary between different situations, but they should provide comprehensive protection. Working with an attorney can help ensure that your lease has the correct verbiage. Otherwise, you could find yourself dealing with legal loopholes.
Hold Disobedient Tenants Accountable
Enforcing your lease is essential when tenants don't adhere to your terms. You should consider the context of the situation before you take action. If your tenant unknowingly or accidentally breached the lease terms, you might consider giving them a warning or lighter punishment.
If they acted with malicious intent, you shouldn't hesitate to hold them accountable. It's best to have a wait list of potential tenants you can contact if you're dealing with a vacancy.
This can go a long way toward stabilizing your passive income. Even a single month of vacancy could cost you thousands of dollars.
Prioritize Finding Good Tenants
The best way to ensure lease compliance is by finding good tenants. This will help you avoid many issues you would have otherwise encountered. When screening applicants, consider their business, rental history, and credit score.
You should also consider their gross income and criminal history. It's not uncommon for owners to ask applicants for a list of references. This can help gauge tenant reliability.
Commercial space is expensive to maintain, and the last thing you want is to rent to someone who won't sufficiently care for the property. A property management company can streamline this obligation. They have the tools and resources required to weed out unfavorable applicants.
Lease Enforcement Is Easier Than It Seems
Ensuring lease compliance as a commercial property manager can seem overwhelming at first. In practice, lease enforcement is a straightforward process that won't give you much trouble if you take the above steps. From here, you'll be sure to find reliable tenants.
Don't have time to handle these responsibilities on your own? PMI Manhattan Group is here to ease the burden. Schedule a consultation today to learn more about how we can manage your commercial property.
