Six Things to Consider Before Leasing Your Commercial Property

The main reason to own a commercial property is to make money. Before leasing your commercial property as an investor, you need to assess the market, your tenants and your terms of the lease. You need to ensure your property is leased by the right tenant at the right rate for you to get the most from your investment.

Here is a checklist of things to consider before leasing your commercial property

Research the Market

Successful investors will have information about the market in which they are engaged. Find out everything you can regarding the commercial real estate market before leasing. Understand the current vacancy rates and market rates for commercial properties similar to yours. Don’t assume all commercial properties have an equal vacancy and lease rates. Get comparable data on lease terms for properties your type.

Know Your Potential Tenants

Just because your commercial property is a prime location doesn’t mean you will automatically get the right tenants. It is important to familiarize yourself with your potential tenant as much as you can before they sign the lease. Reviewing their financial records is a good place to start so as to establish their ongoing ability to pay. The company should have a strong cash flow for them to be able to afford your space for the duration of the lease. Consider any special requirements tenant may have such as extra parking, exterior signage or unusual permits.

Check on Your Zoning Before Leasing Your Commercial Property.

Commercial property spaces must comply with the zoning laws and regulations. Knowing where your properties are zoned is important for law compliance. You don’t want to get fined for leasing your commercial property to a company in an area that is not zoned.

Embrace the Cloud Before Leasing Your Commercial Property .

As an investor, you need to ensure your commercial real estate is up to speed in technology, security and asset management. Upgrading your systems in your commercial properties is the option. With the increasing growth of technology, you need to ensure your buildings can meet the technology needs of your tenants. Upgrading your cable lines or Wi-Fi is one sure way to attract high-paying tenants to your commercial real estate. In addition to internet access, incorporating cloud-based security services can be a key selling point for potential tenants.

Evaluate Your Asset Management Capabilities.

You will probably need to have a management team in place to take care of your assets. Property managers will save you time and ensure regular maintenance, monitor upcoming lease rollovers and watch the financial improvement of the tenants. Inspecting your commercial real estate and receiving the monthly lease fees can be labor intensive. Don’t insist on acting as the property manager for your buildings.

Know Your Tax Situation Before Leasing Your Commercial Property.

Understanding your tax situation as a commercial property investor is important. This is important especially for times when the tax code of a nation may be changing.  Be sure to consult your attorney on any changes in the federal, state and local taxes. Any changes in the tax implications are likely to affect both current and future lease agreements. So, it is important to find out and plan in advance before your get surprises on your tax situation.

Conclusion on Commercial Property Leasing

There are many factors to consider when leasing your commercial property. The bottom line is that the more information you have, the better the chance of succeeding. Remember to follow these tips before leasing your commercial property.