Why Commercial Real Estate Landlords Want to See Your Financials

landlords show space need financialsToday I was searching for retail space for a client and one of the landlords I spoke with asked if my client had any other locations. Why would they ask that? The reason is because they want to know if we are a new startup business or an existing business.

Does that mean landlords will always ask to see our financials before they will show us their available space? Not necessarily however if you did that would make you look much more prepared and like you know what you are doing.

You see to a landlord a startup business means more risk. More risk means a very high probability that the startup will go out of business within 1-2 years. At this point the landlord does not know anything about your business, your experience, or your financial situation. With any first time business owner landlords will look HARD at the business plan and financials. They will ask to see at least 2-3 years of tax returns and/or a personal financial statement. 

If you want the landlord to take you seriously then it's important that you have this info for them upfront. If they think your are risk or lacking experience they won't lease you commercial space, regardless if they have had a space sitting empty for 12 months.

They don't typically require the info before seeing the space however the landlords do typically drill me for info about every company (e.g. length of time in business, experience, financials, etc..) before they agree to consider our tenancy. The reason is because they don't want to risk or waste time with businesses that cannot afford their space.

As a new business you only have one shot at impressing the landlords with our business plan, financials, etc. If you appear to be a risk to them they won't lease your space or they will give preference to another group

At the end of the day they want to see your assets vs your liabilities and confirm that that you have the money to pay for the security deposit, rent, and other expenses as part of doing biz.

If you have any questions about this don't hesitate to call us.

 

 

 

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