Tips for commercial property landlords
There are some similarities and differences between being a commercial property landlord and a residential landlord. Read on to find out what they are, as well our top five tips for Mount Isa commercial property landlords to minimise hassles and maximise your investment return.
Tip #1: Know the current legislation that applies to leasing commercial property
Commercial leases in Queensland must comply with the provisions of the Property Law Act. In addition, if the commercial property is retail premises, then the lease must comply with additional provisions contained in the Retail Shop Leases Act.
This legislation sets out the general rights and responsibilities of both landlords and tenants. Your major rights as a landlord include:
- the right to charge rent for a tenant to lease your premises.
- the right to hold a bank guarantee from your tenant in case they default on their lease payments.
- the right to inspect your premises during business hours provided you give your tenant notice.
Your major responsibilities as a landlord include:
- ensuring that the premises are insured.
- ensuring that the premises are in good condition at the start of the lease.
- complying with all lease terms and conditions.
Tip #2: Be prepared to negotiate to secure long-term, high-quality tenants
Just like with residential property, it’s important to screen your potential commercial property tenants. However, with commercial property, you may have to be prepared to negotiate or provide incentives to secure higher-quality, long-term tenants. For example, by:
- providing temporary rent discounts or rent-free periods.
- contributing to fit-out costs.
If you can secure high-quality, long-term tenants by negotiating or providing incentives, then you will likely have less hassles and a higher ROI in the long run.
Tip #3: Make sure your tenant lease documentation is spot on
You should get independent legal advice from a commercial leasing specialist before you prepare or sign your lease agreement. This agreement should clearly explain the rights and responsibilities of both you and your tenant, and it must be compliant with the relevant legislation.
In particular, the lease agreement should specify whose responsibility it is to pay for all current and potential future outgoings (property expenses). Depending on the type of commercial property you have, outgoings can include things like:
- council rates
- land tax
- body corporate fees
- ongoing property maintenance and repair costs.
Your lease agreement should also include a ‘make good’ provision. This provision requires your tenant to be responsible for ensuring that the property is returned to its pre-lease condition if that is what you want as the landlord.
Finally, make sure that your lease agreement contains an appropriate dispute resolution process that you and your tenant can use if any issues arise.
Tip #4: Be responsive to reasonable tenant requests
It’s important that you (and/or your property manager) maintain a positive relationship with your tenant. One way you can do this is by being responsive to any reasonable requests that your tenant makes. Just like in the residential property market, happy commercial property tenants can make for a much smoother landlord relationship.
Tip #5: Use the services of an experienced commercial property manager
An experienced commercial property manager can help you to professionally source and manage your tenants. This includes collecting rent, organising any approved repairs and maintenance, and generally liaising with tenants on your behalf. It will save you time and hassle.
If you need your Mt Isa commercial property managed, or you’re thinking about leasing, renting, selling or buying any Mt Isa property, then contact our team today for an obligation-free chat!
We’d be happy to provide you with advice and to answer any questions you have.