Investing in commercial rental properties is a great idea from a financial standpoint, especially in a market like the High Desert, where there are lots of opportunities.
A lot of benefits can be found when you own commercial space. But, there’s a lot of risk, too.
You’ve likely heard some horror stories from property owners who have had nightmare tenants or unbelievable situations. Those are tough to hear when you’re an investor yourself. You’re taking on a lot of liability when you buy commercial space, and every investor feels that.
When you can put your fears aside and plan for every potential mishap, you might feel more prepared to handle the disasters. And, there will be fewer horror stories for you to share yourself.
Evicting Tenants from Commercial Spaces
Eviction is tough, and no one likes it. Luckily, commercial tenants in California do not have the same set of extensive protections that residential tenants have. If you have someone who is not paying rent or breaching your lease agreement, you’ll want to consider eviction when no other resolution seems to work.
While there can be horror stories – the process is often time consuming and can be expensive – if you’re working with a smart attorney or a property manager, there’s usually not a lot of risk to you.
But, you have to follow the law.
Here’s what you can do when evicting a commercial tenant:
- Serve a Three Day Notice to Pay or Quit to the tenant
- Complete a Proof of Service form
- Wait three business days for your tenant to respond
- File an Unlawful Detainer Complaint with the courts
- Provide your tenants with an opportunity to leave your property
It’s a good idea to hire an attorney who understands the next steps if you have to go to court.
The horror stories happen when commercial property owners take matters into their own hands and try to evict a tenant in their own way.
Here’s what you cannot do when evicting a commercial tenant:
- Change the locks to the property
- Cut the water, electricity, and other services to the property
- Confront or threaten your tenant
These actions will only cause further problems for you and ultimately delay the eviction.
Managing Non-Paying Commercial Tenants
One of the most common fears most property owners have is that their tenants won’t pay rent as agreed in their lease contract.
Your cash flow and return on investment depend on consistent rental payments. You have your own property-related bills to pay, too. So the horror stories about chasing down late rent every month are unpleasant to consider.
There are some things you can do to avoid late or missing payments.
A thorough screening process will help ensure you’re only placing good tenants with a history of paying rent on time. Verify their finances and make sure they have the cash and the income to afford your rent.
Sign a lease with an enforceable rent collection policy that is consistently followed.
Horror Stories Involving Property Damage
Another horror story you might have heard probably covers property damage. Sometimes, a property owner will walk into a commercial space after tenants have vacated and there will be a complete disaster waiting for them. Sometimes, there’s even vandalism.
Tenant screening is again important for this reason. Inspections can also help. Even if your tenant never requests maintenance or shares complaints, make an effort to visit the property for a general inspection at least once a year. This is the best way to look for unreported maintenance and check for lease violations.
We can help you avoid property management horror stories at your commercial property. Please contact us at Preston-Lee Management Company. We’ve been providing property management services in the High Desert for more than 20 years.
