Why finding the right tenant is key to commercial property investing

Commercial property investing - HKC Property Consultants

One goal as a landlord is to watch your rental income grow year after year, with very little effort required on your part.

But maintaining a passive income isn’t just a matter of selecting a tenant who can pay the rent each month. There’s a bit more to it than that.

If you’re an experienced landlord, you’ll agree that high quality tenants add far more value to your portfolio than recurring rental yields. If you’re new, allow us to fill you in on just a few ways great tenants can keep you sane, and improve your portfolio’s performance.

Property profit boost #1: Good tenants keep your property in shape

A good tenant understands that it’s not only their responsibility to keep your property in good order, but it also serves them a huge benefit. Damage to a property can result in end of lease disputes and tribunal orders – no commercial tenant wants this.

On top of the legalities involved in damage to a property, a good commercial tenant understands that a well-maintained property reflects well on their business. They’ll keep your property in great shape if they value their customers and their own reputation, as a well-maintained property speaks volumes about the customer experience.

Property profit boost #2: Great tenants keep everyone sane

A difficult tenant will require more maintenance, leading to an increase in administrative tasks and disputes. Tenants who pay rent late and tenants who damage a property require an excess of resources. This means your property manager spends less time on other important tasks, exhausting their time and energy.

A high quality tenant is one that actually requires very little attention. They agree to yearly rental increases, agree to inspections, and generally make sure a property manager’s job is easy – and yours as a landlord too. This frees up a property manager’s time to attend to other, more beneficial activities for you.

Property profit boost #3: Good tenants decrease turnover expenditure and vacancy periods

If there’s one type of dream tenant to have, it’s the responsible, long-term tenant. These types of tenants are pure gold and worth holding on to, as searching for tenants can become a costly activity, particularly if there’s a vacancy period. Advertising, preparing leases, performing background checks, and other related activities drain time and returns.

With constantly rotating tenants, material wear and tear can arise, but when you create a scenario where your tenant finds your commercial property valuable enough to stick around, you’ll forego those nagging costs that occur with tenant turnover.

As you can see, finding and keeping a responsible tenant will bolster the value of your investment portfolio, and help you create a more passive income stream.

The question is: how do you find and keep your dream tenant?

Choose a high performing commercial property manager

A reputable commercial property manager will act as a third party, and do all the hard work for you. From advertising to shortlisting candidates, your leasing agency will deal with all of the administrative activities in a timely manner.

Address maintenance issues promptly

It’s up to your tenants to keep your property clean and to report damage, but it’s up to you to ensure repairs are implemented. Leaky pipes and roof repairs need to be dealt with efficiently. If you provide your tenants with a high level of help and maintenance, they’ll stick around longer and renew their lease. It’s a win-win situation.

A property’s value is based on more than its fittings and fixtures, so think of finding the right commercial tenants as a true asset to your investment portfolio. Find them, encourage them to stay, and watch the value of your property rise.

Hiona Kristiansson
By: Hiona Kristiansson

Hiona Kristiansson has worked in the commercial property management industry for 20 years and has complete knowledge of the complex legislation governing commercial property leasing and management. Hiona's extensive experience in managing a range of asset classes includes CBD office buildings, industrial warehousing and retail tenancies. She is a Licensed Real Estate Agent and co-founded HKC Property Consultants in a bid to bring a superior level of service to commercial clients (private investors, corporate owners & tenants alike). Having worked both in a consultant role and directly for a major landlord, she has stood on either side of the fence, which gives her a broader perspective and helps achieve positive outcomes for her clients. Find out how Hiona can help you with your commercial or industrial property. Call now for a complementary 30 minute consultation.

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