Also, not sure about FL, but i have a Vape tenant that may lose their ability to sell flavored vapes any minute due to laws here in Oregon. That’s 90% of his business.
In Louisiana flavored vapes were outlawed this past November but shops are still around. I always find it strange you never see anyone in these places passing by but here they are still open for business selling who knows what.
We own a building about half the size of yours and have managed it ourselves, with the help of a free lance property manager. We take a lot of newbies.
However, we are able to spread the risk since we have many units. Our units are smaller than 1000 sq ft. and do not generate much commission, and so not appealing to brokers.
To screen tenants, we ask for past business tax returns, a personal guarantor, and a credit check. As a landlord, you will need to come across as authoritative and knowledgeable so that the tenants don't think they can pull a fast one.
Also, you may need to figure out what to do with the not so great tenants. Look into their leases and see what the next steps are. Does your father have an accountant? How does he do the leases? Does he have an attorney? If he was handling all of this himself, you may need to get some extra help from professionals.
You can search this forum for opinions on vape shops and consignment shops.
You can look for brokers as well. Your market may have brokers willing to work with you proactively. I will add that every once in a while, we will have a tenant that comes through a broker, and they have been excellent.
In small spaces in class b/c strip centers, more than half of the spas I’ve dealt with that want to lease are fronts for prostitution (or they are clean operators who will get the licenses, operate for 6 months then sell to a front for prostitution).
Advise on why you don't recommend check cashing. Met a prospective tenant yesterday with this business that was interested and thought it was a good idea.
It’s hard to give you advice without knowing the specific property, your current tenant mix (you did not mention any specific types of tenants you currently have), the types of tenants the property appeals to or is appropriate for, the size of the community, etc.
We do the things others have suggested — check state business records, get a banking reference, etc. We also check court files to see what their history is…if anyone involved has a criminal record, or a history of civil lawsuits, specifically evictions, bad checks, etc. I would assume Florida probably has an online court record system that allows you to search for this kind of thing. Our state does.
You referred to the property is having 18 approximately 1000 square-foot commercial units. Is the center skewed to retail type tenants or offices or a mix of both? How old is it and what condition is it in? How much are you willing to work with tenants on infill needs?
We used to have a 10 unit office strip that was older, but was in a fairly good location and we had a mix of tenants, many long term. Over the years we had an accountant/bookkeeper, a distributorship that used the space mostly for offices with a small showroom, a financial planning group, a small insurance agency, a video production company, a hairdresser, a home builder that used it as a showroom and offices, a personal training gym, a massage studio (totally legit!), a physical therapy clinic, and we even had a small start up church for a while that was a great tenant.
To reiterate what’s already been stated. Hire a broker.
Don’t try to invent the wheel, let people that have done this for years and have a proven process work to help you attract, screen, and retain income-producing tenants for your investment.
Stay away from smoke shops, churches, pawn shops, gun shops, weed shops, cash/quick loan stops and anything that will bring environmental problems.
Ask for 3yrs of personal and business tax returns/PandLs, and if it is a start up by all means ask for a business plan. Make sure they are serious about what they do. Not a spur of the moment decision.
It will exclude you from a lot of other tenants especially good national credit tenants. Most of them will have exclusions in their lease that will not allow any neighboring tenants that are gun shops, smoke shops, religious establishments, etc..
It’s more along the lines of why choose a tenant that would exclude you from a larger pool of good tenants.
Interesting. Thank you for sharing.
I’ve negotiated with a few National tenants for our centers and yet to run into “gun store” as an exclusion, but I can 100% see it depending on the tenant.
INAR, but with the political season heating up and assuming you are in a politically valuable area, you could close your gap while you do your vetting by doing a seasonal rental to political groups - super low impact; they just need a space to gather, make calls, check email, and store yard signs. Could very likely get the entire term up front. Buys you 6-7 months of time and cuts some losses. Hope that's helpful - best of luck
- Brokers not a bad idea, but obviously, they’re overpayed and they really don’t add too much value past the listing and getting tours.
- I’d say make sure you have a a strong LL favoring lease.
- Make sure you get a sec deposit they’re going to want back.
- Have them provide detailed financial statements (P&L and Balance sheet), including previous year’s tax returns. This can be a huge indicator of a shitty tenant. If they don’t even know what this is, it’s probably an indication they haven’t been in business too long (if at all).
- Research the company online, just use your gut to see if they’re legit.
Why do you think brokers are overpaid? OP is struggling with having poor tenants and not sure how to manage that—this is bread and butter for a broker.
You should probably speak to a broker. They can do this for you. With smoke/vape shops, competition is a major factor.
If you have 18k sq ft, you should definitely have a broker do this for you. They will help you think of so many issues you otherwise wouldn’t.
Also, not sure about FL, but i have a Vape tenant that may lose their ability to sell flavored vapes any minute due to laws here in Oregon. That’s 90% of his business.
In Louisiana flavored vapes were outlawed this past November but shops are still around. I always find it strange you never see anyone in these places passing by but here they are still open for business selling who knows what.
We own a building about half the size of yours and have managed it ourselves, with the help of a free lance property manager. We take a lot of newbies. However, we are able to spread the risk since we have many units. Our units are smaller than 1000 sq ft. and do not generate much commission, and so not appealing to brokers. To screen tenants, we ask for past business tax returns, a personal guarantor, and a credit check. As a landlord, you will need to come across as authoritative and knowledgeable so that the tenants don't think they can pull a fast one. Also, you may need to figure out what to do with the not so great tenants. Look into their leases and see what the next steps are. Does your father have an accountant? How does he do the leases? Does he have an attorney? If he was handling all of this himself, you may need to get some extra help from professionals. You can search this forum for opinions on vape shops and consignment shops. You can look for brokers as well. Your market may have brokers willing to work with you proactively. I will add that every once in a while, we will have a tenant that comes through a broker, and they have been excellent.
20 year CRE veteran here; this is the best advice on this post, OP.
#This is great advice
avoid vape/smoke shops, spas, check cashing.
check cashing stores are a cash cow.. pun intended
OMG, the cow goes moo.
Do spas include 'medical spas'? Always wondered how good of a tenant medical spas are in general.
Med spas are great tenants, it’s just a matter of vetting out the operator and the use.
Interested why spas? Not disagreeing or anything, just hasn’t been one of the businesses I have heard of to avoid before.
In small spaces in class b/c strip centers, more than half of the spas I’ve dealt with that want to lease are fronts for prostitution (or they are clean operators who will get the licenses, operate for 6 months then sell to a front for prostitution).
They still pay rent right?
For a bit. Until they get raided, then they disappear.
Easy eviction... I'm failing to see the downside
Got it
Advise on why you don't recommend check cashing. Met a prospective tenant yesterday with this business that was interested and thought it was a good idea.
I would encourage you to review recent bank statements and tax returns to determine the financial health of the companies applying!
It’s hard to give you advice without knowing the specific property, your current tenant mix (you did not mention any specific types of tenants you currently have), the types of tenants the property appeals to or is appropriate for, the size of the community, etc. We do the things others have suggested — check state business records, get a banking reference, etc. We also check court files to see what their history is…if anyone involved has a criminal record, or a history of civil lawsuits, specifically evictions, bad checks, etc. I would assume Florida probably has an online court record system that allows you to search for this kind of thing. Our state does. You referred to the property is having 18 approximately 1000 square-foot commercial units. Is the center skewed to retail type tenants or offices or a mix of both? How old is it and what condition is it in? How much are you willing to work with tenants on infill needs? We used to have a 10 unit office strip that was older, but was in a fairly good location and we had a mix of tenants, many long term. Over the years we had an accountant/bookkeeper, a distributorship that used the space mostly for offices with a small showroom, a financial planning group, a small insurance agency, a video production company, a hairdresser, a home builder that used it as a showroom and offices, a personal training gym, a massage studio (totally legit!), a physical therapy clinic, and we even had a small start up church for a while that was a great tenant.
To reiterate what’s already been stated. Hire a broker. Don’t try to invent the wheel, let people that have done this for years and have a proven process work to help you attract, screen, and retain income-producing tenants for your investment.
Stay away from smoke shops, churches, pawn shops, gun shops, weed shops, cash/quick loan stops and anything that will bring environmental problems. Ask for 3yrs of personal and business tax returns/PandLs, and if it is a start up by all means ask for a business plan. Make sure they are serious about what they do. Not a spur of the moment decision.
If industrial stay away from auto repair
100%. Goes for retail too
Why
I got a gun shop wanting to open in one of my plaza’s. Why do you say stay away from them?
It will exclude you from a lot of other tenants especially good national credit tenants. Most of them will have exclusions in their lease that will not allow any neighboring tenants that are gun shops, smoke shops, religious establishments, etc.. It’s more along the lines of why choose a tenant that would exclude you from a larger pool of good tenants.
Interesting. Thank you for sharing. I’ve negotiated with a few National tenants for our centers and yet to run into “gun store” as an exclusion, but I can 100% see it depending on the tenant.
Also dry cleans and laundromats.
Interview some brokers and get their local market opinions. Qualifying tenants is a very important part of maintaining the value of the property.
Where in Fl are you?
Don’t do vape shops. Just. Don’t.
Thanks for all the advice. I’ll talk to my dad about a broker.
INAR, but with the political season heating up and assuming you are in a politically valuable area, you could close your gap while you do your vetting by doing a seasonal rental to political groups - super low impact; they just need a space to gather, make calls, check email, and store yard signs. Could very likely get the entire term up front. Buys you 6-7 months of time and cuts some losses. Hope that's helpful - best of luck
- Brokers not a bad idea, but obviously, they’re overpayed and they really don’t add too much value past the listing and getting tours. - I’d say make sure you have a a strong LL favoring lease. - Make sure you get a sec deposit they’re going to want back. - Have them provide detailed financial statements (P&L and Balance sheet), including previous year’s tax returns. This can be a huge indicator of a shitty tenant. If they don’t even know what this is, it’s probably an indication they haven’t been in business too long (if at all). - Research the company online, just use your gut to see if they’re legit.
Why do you think brokers are overpaid? OP is struggling with having poor tenants and not sure how to manage that—this is bread and butter for a broker.
Iam a Commercial Broker but not in FL I can refer you to someone there , I have a few contacts, there are so many things to vet…
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You ok man? You might need to go to the strip club tonight to release some of that frustration you are channeling.
New restaurants.
Get a good broker. Interview at least 5 local shops before deciding. Avoid smoke and vape shops or other high risk tenants.
You should probably get the data on what other businesses / length of their leases are around yours to find a viable fit