Question for group - tenant wants to rent out property, how to ask financial statements?
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[{"id": "iqahw1p", "text": "Perform due diligence prior to contacting an attorney.\n\n1. Request prior experience, existing locations, etc.\n2. Request three years of personal and business tax returns.\n3. Request three years of bank statements (originals).\n4. If there are existing businesses request Profit/Loss reports for last three years.\n5. Negotiate general terms via LOI (base rent, NNN, rent abatement, security deposit, options, Landlord/Tenant responsibilities, etc).\n\nDepending on how you structure the lease, confirm they have the capital and ability to build-out the space.  If it's a food operation you want a Tenant who has significant prior experience.  Food operation is a high competitive industry.  After this preliminary due diligence is satisfactory to you, reach out to a Landlord/Tenant attorney to draft a commercial lease.\n\nI strongly recommend requiring a personal guarantee.  Either for the full term of the lease, or a portion then into a rolling guarantee of two years.  There are many ways to structure it.  An experienced Landlord/Tenant attorney will be able to provide feedback based on your area.", "replies": [{"id": "iqal2mp", "text": "Okay great, thank you! So I can just tell the tenant to email these over to me? Is there a reliable background check people use?", "replies": [{"id": "iqanta6", "text": "My office is on the Yardi platform.  You should request their personal information and run a background check to confirm how much debt they have.  There's several sites which offer the service.  Debt is the key factor along with score.\n\nRequesting financials is standard.  A Landlord is not going to lease a commercial space to someone/group without confirming they have the experience, capital, and ability to operate successful and pay rent through the duration of the term.", "replies": [{"id": "iqb22z4", "text": "Thank you! I've only worked with brokers in the past who did the background checks and requested financial statements. \n\nSince the potential tenant reached out to me, I guess I can request them myself and then hire a lawyer after I get their financial statements.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iqamo21", "text": "Don't feel bad about asking for financials.  I would do LOI first on your own but after that tell them to send the financials on over!   No real magic way to validate their financials for small companies but you might also ask for a bank statement which will show recent funds in/out and might help you validate what you get sent.", "replies": [], "depth": 1}, {"id": "iqbo701", "text": "You can ask for whatever you want and know how to review. If you need help then call a broker or an attorney once you have the info requested", "replies": [], "depth": 1}]