Choosing Tenants for Commercial Property

Dear Property Manager,



I have been leasing out a small commercial property for about a year now. I have had good luck, and bad luck with the tenants. Some are great... and well others have been a huge headache. As the lease terms are up, I want to do a better job screening my tenants. What advice can you give me and other landlords so that they get the best tenants for their commercial properties?



Henry J - Charlotte



Dear Henry,

As a landlord, having the right tenants is very important--they can be the difference between a profitable business and one that is full of dissapointment and frustration.



Problem tenants, may or may not be easy to spot at the onset - and your "gut instinct" could put you in an unfavorable position with a cronic late-payer, or worse.


We have 10 recommendations that you, and other landlords can follow to choose the best potential tenants.

1. Use a rental application. A completed rental application will give you the the starter information you will need to know about the applicant, including references.


2. Follow the Fair Housing Act (FHA). This act is in place to ensure that landlords are not denying someone the ability to rent property based on race, religion, or similar reasons. Make sure to follow the regulationa and avoid claims of discrimination by adhere to the FHA's code of ethics for landlords.


. Get proof of identity. Insist on seeing a valid photo identification card from your potential tenants. The rental application should include a section to write down the driver's license number. Make a photocopy of the photo ID to attach to the application.

4. Perform a background check. Checking up on your potential tenant's past may not be fun, but it can help ensure that there are no preexisting problems lurking beneath the surface. If your potential tenant has a history of skipping rent or destroying property, you may be able to find this out through a background check.

5. Perform a credit check. In addition to a background check, you can check a potential renter's credit history. You will need to get his or her permission in writing as well as their Social Security number to perform this check.

6. Get the name of the previous landlord. Not all landlords report problem tenants to the authorities, so it's a good idea to follow up and check with their former landlord.

7. Ask for character references. Ask for references ? and actually check with them. Not all applicants will give you "real" references, so following up is essential.

8. Meet your prospective tenants in person. In our busy world, many people are switching to digital communication and phone meetings. However, it's important to take the time to actually meet face to face with your potential tenants. This will help you get an idea about their personalities, and goes a long way toward making a lasting relationship.

9. Protect yourself. In addition to following the FHA, your rental application should state what you will do with the information your potential tenants provide. If you do not have their permission to run their credit report, you may not do so. Be up front by explaining your process, so you'll be protected from potential future allegations of impropriety.

10. Include a written code of conduct with the rental application or written lease. This should clearly state what's expected of you and your tenant, and will allow you to make sure everything is clearly explained. Have the prospective tenant sign that they have read the code of conduct.

By covering all your bases, you can help ensure that you will not only have the best tenants for your rental property, but also that your rights and the rights of your potential tenants are being protected.