Investing In Commercial Real Estate – Get To Know Your Prospective Tenants
If you’re considering investing in commercial real estate then it makes good sense getting to know your tenants before you sign on the dotted line. It’s rare for a seller to a warn a potential buyer about any negative aspects of tenants although poor rent histories should be evident if accounts are available for review. By getting to know the tenant, you will be going into the sales negotiation process with your eyes fully open.
You can familiarize yourself with the tenant in a number of ways. Obviously, you can visit the building, introduce yourself, and discuss issues to do with the building. You can also visit as a customer or potential customer. Other methods include talking to other business owners in the area and making inquiries with law enforcement and local government agencies.
One area that is often overlooked is the internet. This may give you an idea of whether or not the tenant has a poor reputation with customers, former customers, or perhaps even those who have dealt with them at other locations. The last thing you want is to invest in commercial real estate only to find what you thought was a profitable tenant, was in fact a person with a reputation for fly-by-night escapes.
Most tenants are good tenants and like most people, will find that change is a little uncomfortable. If you can develop a rapport with the tenant prior to finalizing the sale, you will at least be starting with a positive. Commercial real estate can be risky at the best of times – a little research can often make life easier for everyone involved.
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