Questions to ask tenants on a strip center due diligence?
Buying a strip center and need to interview current tenants what are some good questions to ask tenants? Here is what I have so far.

How is business and do you plan on renewing lease?

Any issue with the building or roof leaks?

How is property management company?

Any other issues I should know about?
[{"id": "irbmrbv", "text": "During Inspection - condition of roof, condition of parking lot, condition of HVAC, upgraded for ADA?", "replies": [{"id": "ircjadh", "text": "Do you normally hire a roofer, Hvac and parking lot person all separately to inspect these or one GC to do it?\n\nHow do you know if you need to be ADA upgraded?", "replies": [{"id": "ircr1on", "text": "Re inspectors it can vary. Re ADA, ideally buildings exterior (ramps, parking, signage, etc) and interior (door, bathrooms, register/counter height, etc) is ADA compliant as fixes can be expensive. I believe California is one of the few or only state where a handicap person can sue and collect from both the landlord and or tenant for failure to meet all ADA requirements. Just settling a frivolous ADA lawsuit in California can easily cost $10,000. One of many examples of a serial ADA lawsuit filer is linked below. \n\nhttps://www.mercurynews.com/2021/06/28/serial-ada-filer-sets-sights-on-bay-area-merchants-submitting-1000-complaints-in-two-years/", "replies": [], "depth": 3}, {"id": "ird0os1", "text": "You should have a property condition assessment done. They will give you a general idea of everything and if you get a good one, will give you costs for immediate, short term (less than a year) and longer term expenditures you can expect.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "irbn9ft", "text": "See if you can get actual sales, as much data as possible. Lenders will want to know health ratios and trends. Many don\u2019t report so you\u2019ll benefit from a direct convo", "replies": [], "depth": 1}, {"id": "irbodsk", "text": "Dry Cleaners / Phase I / Historical use", "replies": [], "depth": 1}, {"id": "irbwtxm", "text": "How did your business fair during and coming out of Covid? \nDoes your current space size fit your needs? Any thoughts of growing?\nWhy did you select this space and location for your business?\nIs there anything you'd like changed with the center?", "replies": [], "depth": 1}, {"id": "irbxcvp", "text": "Another good question is to verify their liability insurance naming the LL as additionally insured is current and up to date.", "replies": [], "depth": 1}, {"id": "irbyw8a", "text": "The LL\u2019s allowing you to disrupt the tenants? Interesting.. that would be a no fucking fly w me - esp talking about lease renewal .. are you serious? \n\nA lot of these comments don\u2019t make sense. HVAC typically responsibility of tenant (maint and repair). \n\nCondition of parking lot? You can see that w own eyes and will just be CAM assessment if bad\n\nListen just focus on the RR, T-12, and leases. I\u2019d look into insurance and other smaller items. And the contracts in place. Do not disrupt the tenants and ask questions. Do not ask about sales. If the lease doesn\u2019t require them to report, then oh well your SOL. \n\nThese ppl commenting have no clue\n\nMods - can we clean this place up? Other subs sometimes require proof to post. Let\u2019s implement that here. I see no good advice being shared in this community usually. Most of it is illegal too depending on your country of residence. This building is not his yet", "replies": [{"id": "irc40mm", "text": "As a banker that finances commercial real estate, we are going to want to know the financial capacity of some of the tenants to ensure their ability to pay rent. Especially if it's a single use or specialty piece of CRE.", "replies": [{"id": "irc63wi", "text": "If they\u2019re current on their lease and there are zero AR\u2019s and the property is performing on the current debt, there would be no reason to disrupt the tenants. Even if the property started to not perform and started dropping below the occupancy and performance metrics in the note, you wouldn\u2019t talk to the tenants you\u2019d talk directly to the LL\n\nYou wouldn\u2019t do that w an industrial building, a MF property w hundreds of individual tenants, a multi tenant class A office high rise. Probably not even That\u2019s what we\u2019re talking about - multi tenant - not a single tenant net deal or \u201cspeciality\u201d\u2019piece. This question (because was not stated otherwise) is a multi tenant center w current paying tenants.", "replies": [{"id": "irdp83b", "text": "I\u2019d just walk away from any CRE property, with the exception of multi family, if I couldn\u2019t talk to the tenants.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "ircaqsg", "text": "Could not disagree more. See my top level comment, but I always advise my clients to interview every tenant. \n\nI ask all of these questions for every tenant and have a friendly and productive conversation 99% of the time. The tenants also almost always feel better about the pending transaction after the interview. It's not rocket science why-- they feel like someone cares about them and their opinions. \n\nWild that you're calling out people for not sharing good advice when you're the one giving bad advice out.", "replies": [], "depth": 2}], "depth": 1}, {"id": "irc0yln", "text": "With leases shorter than 36 months left I would start feeling out for renewal probability so you can firm up your proforma as much as possible.\n\nThe highest priority should be on getting estoppel certificates signed with everyone. I would primarily be asking if they are functioning in accordance with the lease (is they don't have any side agreements etc)", "replies": [], "depth": 1}, {"id": "irc8ziu", "text": "I actually do this (due diligence on strip centers) as a consultant for a living, and have helped my clients buy nearly 100 strips. I've done well over a thousand tenant interviews. Ignore the comments about disrupting tenants-- tenants are smart and will find out the property is for sale. Often, if a seller tries to hide the fact the building is being sold, it causes more drama and needless concern than if you're just honest about it. it's commercial real estate-- properties get sold, that's just what happens. \n\nHandled correctly, a tenant interview is a great way to start off your relationship with your tenants on the right foot. Remind them that the lease transfers to the new owner as-is and cannot be changed without consent from both parties. No need to scare anybody that you won't renew them.  \n\nI have a long list of questions I ask every tenant = but these are key: \n\n* How is business going? How did you get started?\n* Are your sales trending up or down? Ask for sales figures, lenders love them, and a lot of insight can be gained.\n* Do you have expansion/ contraction plans?\n* How did you handle COVID? \n* Even if their lease isn't up soon, all things remaining equal, do they want to renew?\n* Any safety issues? Lighting at night? \n\n\nThe rest of your questions are great. Ask them. I am immediately suspect of a seller who doesn't want me to talk to their (soon-to-be-my-clients') tenants. What do they have to hide?", "replies": [], "depth": 1}, {"id": "irccmka", "text": "**#1 Ask about the AIR CONDITIONING does it work properly, who maintains it, are the maintenance records and inspections up to date? If it breaks whose responsibility is it to fix and pay for it?  Of all the misery I've had with my commercial clients, whether landlords or tenants the biggest one is the AC and keeping it in good repair. Especially in older class B &amp; C property these records are often missing or not accurate. Make sure you understand the condition of the AC and about how many  more useful years of life it has and what it will cost to replace when it finally dies and make your decisions accordingly.**\n\n**#2. The roof** and roof damage, leaks, leaks that result in structural damage, mold.\n\n**#3. Sewer connection,** does it back up, does it flood, water damage, code violations\n\n**#4 Food and beverage use**, is everything legal? up to code, functioning, hoods, sinks, back flow preventers, wiring, grease traps? Are there current valid health department clearances? Do all your tenants have valid certificates of occupancy?\n\n**CAM** I'd want to see at least a year or two of CAM charges. In my experience, when owners cheat they cheat on the CAM, and when you discover they've jiggered the books, the CAM almost always comes into play. They pad it, they put down services they don't provide, (especially landscape maintenance, admin services and fees, security, advertising, etc. They misstate what they have provided and they often make errors on the prorations.)\n\n**Not all commercial  property is class A,** a lot of building  still in use are not in the greatest condition. If you buy a property like that make sure you have enough insurance, and also make sure you know if you are facing any major existing violations that have not been disclosed (fire code violations the most serious, other health and safety violations also serious). Lots of the building I've worked with have made many changes without the benefit of permits. If you're buying a building like that, all those infractions, retrofitting, after the fact remediation and fines will come to you. It's worth the time and effort it to check it out. If you know and you still want it then go ahead.", "replies": [{"id": "irfu8fa", "text": "To expand on this, if OP is looking at class C/D retail, a lot of brokers and owners will claim they are NNN when in reality they are not billing CAM charges and it is showing up in the deferred maintenance of a worn out parking lot that has not been sealed or painted. It will be tough implementing CAM because this could tip the tenants into default or push them to leave with the big bump in CAM on top of rent charges.", "replies": [], "depth": 2}, {"id": "irfy9z0", "text": "How do you know if you have fire code violation or health/safety violation? Have them physically come out and check for this?", "replies": [{"id": "irfzhyy", "text": "Here we call the county to see if there are any outstanding violations (**existing violations that have already been cited and are still unresolved.**) \n\nYou can call the county to ask for an inspection; but I'm pretty sure the seller and the tenants would not be happy about it and it might come back to bite you.  \n\nI never yet met a fire inspector who didn't feel duty bound to find something wrong, it's in their DNA. Better to rely on your own inspector to alert you to violations that have not already been reported.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ircdd5y", "text": "What state are you in?", "replies": [], "depth": 1}, {"id": "irce2pc", "text": "Do you have the leases up front?\n\nAre they triple net?\n\nIf so, ask to see the service tags on all mechanical systems - hvac, sprinkler, grease traps, elevators, etc so you can see if they have been maintained. \n\nI\u2019d really have your building inspector so a cost needs analysis during DD that shows the life hood left in your cap ex systems and how much you will to set aside in reserves or what you need to finance now  in your mortgage. \n\nThen go to maintenance rules outlined in the leases.\n\nMost tenants don\u2019t give a shit about thier maintenance responsibilities or don\u2019t understand them and let your building rot. So you need to police lease violations and bill bavk if you have to step in.", "replies": [{"id": "ird1i04", "text": "Definitely agree with the statement \"Most tenants don\u2019t give a shit about their maintenance responsibilities or don\u2019t understand them and let your building rot.\"", "replies": [{"id": "irdc24p", "text": "Spade a spade. \n\nIf it\u2019s triple that I used to do the CAM true ups, and in their letter include important dates for the next 12 months including their certificate of insurance renewals any upcoming lease extensions, rent pumps etc.\n\n\nAnd then I would always add the disclaimer that we would be in April to check all of the mechanical systems to make sure they\u2019re being maintained by licensed professionals with tags on them. Tenants would get a warning and a 30 day period to get any expired tags in line we would come back in 60 days and if it wasn\u2019t done we would do the work ourselves and build them back while also issuing them a lease violation. Three lease violations in one year and they could be up for eviction. \n\nI was a commercial property manager for 13 years and I really loved it and also taking on the responsibility of asset management and not know it and I wasn\u2019t compensated for it. So fuck those guys now I am a commercial real estate appraiser and I had to keep these buildings worthy of that top dollar", "replies": [{"id": "irehbxs", "text": "What you describe is one of the most thankless (but essential) jobs in the field. Bet the experience came in handy when you switched to appraisals.", "replies": [{"id": "irfch08", "text": "Thank you. For sure, it was like I was a giant pain in the ass to the owner who just wanted to keep distributing, distributing, distributing. \n\nI was like\u2026 um\u2026 distribute after put some in reserve\u2026 and we recoup some operational expenses from the NNN\u2019s. He was literally so offended he pushed me out and I quit. Good luck guy!", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "irce7su", "text": "Ask tenants with expiring leases if they plan on staying?", "replies": [], "depth": 1}, {"id": "ircse0b", "text": "Congratulations if you're buying any commercial property make sure to get a cost segregation study done on that happy to help", "replies": [], "depth": 1}, {"id": "irem121", "text": "Not directly related to exact questions for a tenant interview (every tenant/strip center is different) .... but here is a link to my due diligence checklist for strip centers that you might find helpful in guiding some of your questions https://derienzo.gumroad.com/l/zjifwy", "replies": [], "depth": 1}]