Well, the great Oracle of Omaha, Warren Buffett, maybe the greatest investor in our times, owning such valuable stock today as Coca Colas. And if you’re going to put his investments in a microscope, you’ll see he also invested in some commercial real estate. And that tells you a lot about the business. Commercial real estate is indeed a profitable business if you know how to handle it right.
But like any other business, commercial real estate comes with its own challenges. Talk about having to deal with commercial landlord and tenant issues. To confound things even more, there are also legal issues that could come up. Truth be told, you must set your sights on these challenges early on. To do that, here are some of the most deadly mistakes you need to steer clear of.
Not doing thorough tenant screening
When accepting a tenant into any of your properties, proper screening is not an option. It’s a must. You will be shooting yourself in the foot by not doing the thorough screening.
You must have a methodical way of doing so. For starters, it is important to ask key questions. To make things easier for you, make a tenant form to be filled by all applicants. That way, you can find out all you need to know about prospective tenants.
For example, finding out if the business makes enough money is significant. Another key aspect is why they left their previous space. These are telltale signs of what kind of tenant you’ll be facing. That way, you know whether the tenant will be a good one. With proper screening, the chances of having to evict tenants are low.
And from there, you can do your due diligence. Get on the phone and call his landlord before. Or do some reputation checks. It’s always better to be informed before you make your decision.
Not knowing landlord-tenant laws
Right off the bat, you are in the wrong if you have no idea what laws bind you. Different laws have been put in place — laws that could help you. These are to protect both the landlord and the tenant.
However, if you have no idea what these laws are, you could be waiting for a disaster to explode in your face. The remedy? Take out time to know the laws. The laws for different states differ. Just find out the landlord-tenant law for your state. Find out how it can affect your business or you as a person. And make sure to avoid such from happening.
Trying to evict a tenant on your own
When trying to evict a tenant, don’t try evicting on your own. The best option is getting legal counsel to help out. With reliable counsel, you have less to worry about.
The legal counsel would help out with informing the tenant of the eviction notice. And then every other dealing of the tenant would be with the legal counsel. This makes commercial tenant eviction a lot easier for you. You need not be bothered about getting the tenant out with all the hassle.
Cutting down on insurance
Insurance is one thing you shouldn’t joke about when you own a commercial property. Make sure you get the right insurance at the right time.
Trying to evade insurance or getting the wrong insurance would cost a lot in the long run. In effect, this would cause you to lose a lot as a business owner. Additionally, getting an insurance advisor to help out with making the decision is also wise. That way, you make fewer mistakes, if at all.
Ignoring maintenance issues
Whenever there is a maintenance issue in the building, get it fixed as soon as you can. Ignoring the issues and making them get worse would cost you a lot more. Fixing the small issues when noticed or notified about them would cost you less. In the end, the building can remain in its best condition for a long time, not to mention get your reputation up.
Maintenance issues unresolved put your tenants in a compromised position. That means their businesses get the losing end of the bargain. And that bad rep can multiply pretty quickly. When word gets out that your commercial spaces are losing business, tenants could desert you. Worse, you might find it hard to find new ones. And all because you took time to address issues that are standing out like a sore thumb.
Indeed, you might not become as big as a multi-billionaire Warren Buffett. But if you play your cards right, you can generate success more than anyone can imagine.