Screening Tenants: How to Know if a Potential Tenant Can Be Trusted
If there is one thing Texas commercial real estate owners have to know, it is that looking for good tenants is something that bears paying special attention to. After all, commercial tenants are not like residential tenants, the rental length tends to be longer and they pay more money. When there is so much to lose, commercial real estate owners in Texas just cannot afford to let down their guard. Now screening tenants is not the easiest thing to do and it becomes especially hard especially for folks who do not know much about it. Check out some tips below for screening potential commercial space tenants.
- Establish a tenant screening process. The first thing you need to do is to prepare application papers that interested tenants can fill up. To show that you do not discriminate, make sure that each and every prospective tenant fills up the form. Also, make sure you make it clear on the form that you want permission to perform a credit check.
- Do a credit report screening. There are three national credit bureaus you can use to check on the credit histories of your prospective tenants. These credit checks will tell you all you need to know about the tenants and you can even check if they pay bills late, or if they have ever been evicted or filed for bankruptcy. To go through with the credit screening, you will need the social security number or federal tax ID number along with the name and address of the prospective tenant.
- Collect personal information. It is a common practice in commercial leasing for tenants to use the credit and general information of the company in place of personal info. However, if the prospective tenant is a start-up or a new business, you should go ahead and do a personal screening. This isn't because you are nosy, but you need to know whether the business owner is capable of paying the lease even if the business closes before it ends. You may allow for a personal guarantee to be included in the lease if you find it necessary.
- Look for tenant screening services. Screening prospective tenants is not an easy job so if you think it is more than you can handle, call on a tenant screening company and ask them to handle the nitty-gritty for you. Not only can they perform credit checks but they can also look into criminal records (if any) and check any references listed by prospective tenants. You may use the reports they come up with to serve as proof that you are not discriminating against sex, religion, race, etc.
Texas commercial real estate owners need to know their rights when it comes to screening tenants. No matter how difficult and time-consuming it may sound, it is a good idea not to skip this step because it is one way to protect your property and investment. It is also a good way to protect yourself, from tenants who could ruin your business and reputation. Avoid bad tenants and screen—there’s no harm in checking and double-checking for your safety.
If you or someone you know, is interested in investing in commercial real estate, feel free to contact me:
Allen J.-Texas Real Estate Broker www.TexasRealtyPros.com broker@texasrealtypros.com 832-305-7653
