Commercial tenant screening sometimes requires an in-depth analysis of your potential tenant and is a necessary step in the leasing process. But what happens if you don’t conduct one? Is it worth going through the hassle and overspending to avoid it? Here are reasons why you should use a commercial tenant screening.
Commercial tenant screening provides vital information
Commercial tenant screening is vital to help you make good decisions when you’re looking to rent out your commercial property. Here’s a look at what you can find out:
Credit history
Commercial tenant screening gives you information about a potential tenant’s credit history, including their credit score, how many lines of credit they have, and whether they have any liens, judgments, or bankruptcies. This is important because, as with any loan, if the tenant doesn’t pay the rent, you’ll need to rely on the money that would’ve been used for the next month’s rent to cover it.
Eviction history
Eviction is an expensive and time-consuming process. A commercial tenant screening can tell you whether a prospective tenant has been evicted before, which can be a red flag that they may skip out on their lease and force you to evict them later on.
Rental history
Proper screening will let you know if a prospective tenant has bad references from previous landlords or has skipped out on leases. It also tells you whether the landlord has sued for unpaid rent in the past and whether the person has ever filed bankruptcy, which could indicate future financial trouble.
Credit limit recommendation
Credit limits are like a credit card limit. It is the maximum amount that a bank will allow you to borrow from them at a given time. A higher credit limit means more money available for use in your business activities but also more debt that could accumulate if misused.
Judgment filing
The tenant’s financial status and credit score are often not enough to give you a complete picture of the tenant’s financial situation. A judgment filing shows that a court has ruled the applicant owes money, and it’s a public record that can be used to determine if the tenant will be able to pay rent on time. If a tenant has been sued and lost or been foreclosed upon, you can use this information to decide whether or not you want to take on that tenant.
To improve your chances of finding the right tenant
Commercial tenant screening can help you decide whether a particular applicant will be a good tenant for you. The information gathered through screening is similar to the application that residential landlords use, but it’s specifically designed for commercial properties and contains a few additional questions that are important to ask when leasing space to business tenants. Asking the right questions and using other techniques like pulling credit reports can improve your chances of finding the right tenant.
To limit your exposure to risk
You may have the tenant from hell or one who’s committed fraud. You might also end up with someone whose credit is so bad that they can’t afford to pay rent or someone who has a history of violence. A thorough screening helps you avoid these types of tenants by giving you as much information as possible about each applicant.
With a well-written screening document, you can collect enough data to make informed decisions about whether you want to move forward with a particular potential renter. If the applicant is hesitant to share the requested data, it’s a red flag that maybe this person isn’t being entirely honest or has something in their past that could be problematic for you.
Tenant screening helps you avoid bad debt
Tenants that don’t pay on time or at all can cost you thousands in lost revenue and legal fees. Thankfully, with a little bit of research and the right tools, you can avoid renting to unreliable tenants and save yourself from unnecessary headaches.
The Commercial Tenant screening check is a necessity in the business world today. It is recommended that you have these checks performed on all commercial tenants before moving forward with any leasing agreement. If you or anyone you know needs commercial tenant screening services, contact SWFL Commercial Group at 239-510-3606.
