“How To Successfully Manage Your Commercial Rentals”

Looking for tips on managing commercial rentals?

Not all property managers achieve success in managing a rental property. Some of them fail because they’re not paying attention to the little details that they shouldn’t ignore.

Before, I also ignored some things that I thought were unnecessary. I did it for years until one day, a problem happened in my rental property as a result of my negligence.

That little problem cost me a lot. Since then, I’ve  always paid attention to everything happening in my commercial rentals.

Ignoring little details or things in your commercial rentals can lead to major problems in the future.

Trust me, you don’t want that to happen because it can cause instability in your operations and cash flow.

To help you avoid the potential problems that can negatively affect your commercial rentals, today’s blog post will be about tips for managing your property.

Tips for Managing Your Commercial Rentals

There are dozens of blog posts on the Internet that’ll give you tips on managing a rental property business with commercial rentals.

However, most of those tips aren’t applicable to every rental business.

With that said, I compiled the most important tips that you can use in your every rental property business — including your commercial rentals.

Find Your Target Market

To have a successful rental property business, you need to have the right tenants for your property.

If you have a commercial property, expect your tenants to be business owners. The specific type of business owners who’ll apply to be your tenants depends on your property.

Commercial properties are divided into different categories. Here they are, along with the types of businesses that use these properties as commercial rentals:

  • Leisure – Hotels, public houses, restaurants, cafes, sports facilities.
  • Retail – Retail stores, shopping malls, shops.
  • Office – Office buildings, serviced offices.
  • Industrial – Industrial property, office/warehouses, garages, distribution centers.
  • Healthcare – Medical centers, hospitals, nursing homes.


Make sure to market and advertise your property to people who belong in the category of your property. Advertising it to the wrong tenants will only result in wasted time and money.

Allocate Your Budget Evenly

As the property manager, it’s important to treat your commercial rentals like a serious business if you want to achieve success.

What does that means? It means that among other things, you need to ensure the following:

  • First, that you have a sound business plan.
  • Second, that you hire quality employees.
  • Third, that you allocate your budget evenly.

Always remember to put a budget on every aspect of your commercial rentals, especially their maintenance.

That’s because maintaining commercial rentals regularly can actually save you money in the long run. After all, the longer you leave a problem on a property without fixing it, the worse it tends to get.

That means what might have cost just a few dollars to fix when it started may balloon into damage requiring hundreds of dollars to repair later.

So keep an eye on things like maintenance of your commercial rentals. Allocate money to that.

Also, consider adding a budget for investments that can improve your property such as amenities.

Adding useful amenities to your commercial rentals can help in attracting potential tenants.

Don’t Forget to Document Everything

Documentation is an important aspect of the rental property business. It can help you keep track of everything from your employees to your taxes for your commercial rentals.

That’s why most property managers ask a tenant to sign an agreement before they can use the rented property.

The usual commercial rentals agreement includes details about you, your tenant, and the rented property.

Aside from that, it also contains the terms and clauses for renting the property.

Here is the usual content of a lease agreement:

  • The term of the lease,
  • Amount of rent and forms of payment,
  • Details about the security deposit,
  • Facilities to be included in the rent,
  • Responsibilities of both parties for the utilities and maintenance,
  • Details about parking space,
  • Restricted activities on the commercial rentals, and
  • Violations that could break the lease.


Your lease agreement will help you defend yourself if ever an argument or misunderstanding with the tenant is brought to the court.

With that said, make sure to contact a rental lawyer every time you’re making a commercial rentals lease agreement.

Doing this will assure you that your agreement complies with the laws for commercial rentals in your area.

It can also help you make sure that everything you need to address is covered by the lease agreements for your commercial rentals.

It’s all too easy to miss something important — and a rental lawyer can help you prevent that.

The lease agreement will also dictate how tenants should behave inside your commercial rentals.

With that said, it’s advisable to only choose the tenants who agree with your terms and clauses for renting the commercial property.

Renting your property to tenants who refuse to sign the agreement will result in several misunderstandings throughout their tenancy.

It can also pose a serious risk to the condition of your commercial rentals. After all, tenants unwilling to abide by your agreement aren’t likely to be considerate about how they use the property.

Have a Tenant Screening Process

Aside from having a lease agreement, conducting a tenant screening process will also help you achieve success with your commercial rentals.

Tenant screening is actually something performed by property managers for residential properties too. It’s more or less a fixture in every property manager’s toolkit.

That’s because tenant screening prevents you from taking on bad renters in your property.

Having a bad renter increases the possibilities of having problems. There are a lot of problems bad renters can bring:

  • Late rent payments,
  • Damaged property, and
  • Costly evictions.

That’s why it’s important to know the tenant first before you let them use your commercial rentals. You need to find out if they’re a high or low risk tenant, so to speak.

The easiest way to know your commercial rentals tenant in a short period of time is by conducting a tenant screening.

The Background Check

This process usually consists of a background and credit check that gives you an idea about the applying tenant’s rental history.

The background check will give you an idea if the potential tenant has any of the following:

  • A criminal history of property damage,
  • A record of violent offenses, or
  • A past with other serious crimes that could pose a high risk to your property.

The Credit Check

On the other hand, the credit check gives you an idea if the potential tenant is capable of paying their rent in full and in time regularly.

A credit check usually involves getting the potential tenant’s credit report from one of the major credit bureaus.

Doing that will give you a credit history of the potential tenant in question. That’s basically a history of their financials and how they manage their money.

If the potential tenant’s credit report shows that they have a lot of bad debt or have a record of defaulting on loan payments, they’re probably not a good bet for your commercial rentals.

You also want to avoid potential tenants who have a record of prior evictions.

Take note that some property managers for commercial rentals require more than the potential tenant’s personal credit score.

Sometimes, they require his business’s credit report too.

Either way, just make sure the report you check shows a good history of financial management. Shoddy financial planning indicates a high chance of the tenant defaulting on rent payments later.

Keep Track of Your Cash Flow

Make sure that your commercial rentals are earning enough revenue to cover expenses. These expenses may include taxes, mortgage repayments, upkeep, etc.

With that said, consider using the 25% rule.

The total operating expenses for commercial rentals should not exceed 25% of the total gross rental income received.

In addition to that, it’s important to be strict on late rent payment for commercial rentals.

Never tolerate tenants who are consistently missing their rent and failing to pay the rent in full. Tenants like them will just give you financial problems.

If you do end up with such tenants, it may be wise to terminate the lease. Look for a new tenant who can pay the rent for your commercial rentals in full and on time.

Fulfill Your Obligations and Responsibilities

Keep in mind that you’re legally obligated to fulfill your responsibilities as the property manager of commercial rentals.

Failing to fulfill your responsibilities can negatively affect the reputation of your rental property business.

Your job doesn’t stop after collecting the rent. You’re also responsible for repairing and fixing the malfunctioning systems on your commercial rentals.

Aside from that, property managers are required to follow the rental laws and building codes in their area. It’s your responsibility to keep the tenants safe in your commercial rentals.

Final Thoughts on How to Successfully Manage Your Commercial Rentals

To achieve success in your commercial rentals, you need to treat them like a real business.

To do that, make sure you have a sound business plan, marketing strategy, good employees, and the right mindset.

You also need to market your commercial rentals to the right tenants and accept them professionally.

Marketing your commercial rentals to the right tenants makes it easier for you to fill vacancies in your properties. Fewer vacancies means more revenue for you.

Be warned that you need to conduct a screening process on applicants too, though.

After all, you want the tenants of your commercial rentals to be capable of abiding by your lease agreement and paying the rent on time.

Ask your tenants to undergo a tenant screening process and sign a lease agreement. Consult a rental lawyer too before you create the lease agreement, since you want to be sure it follows the rental laws in your location.

Aside from that, don’t forget to allocate your budget evenly and keep track of your cash flow for commercial rentals. The revenue of your property should cover its expenses, including the maintenance cost of your commercial rentals.

Lastly, always remember to fulfill your responsibilities in your property. The lease agreement for your commercial rentals should set those down.

If you have more questions about commercial rentals, leave them in the comments below.

 

 

Suggested Articles:
1. Things To Know About Termination Of Lease
2. Comparison Of Different Tenant Screening Services Reviews
3. Tenant Notice To Vacate And What To Do

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Article: How To Successfully Manage Your Commercial Rentals

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