Credit Risk
Credit risk is the possibility that tenants or borrowers will default on lease or debt obligations, requiring underwriting analysis and risk mitigation strategies.
| Credit Risk Assessment | Factor |
| Tenant financial strength | Credit rating, financial statements |
| Business stability | Industry, operating history, management |
| Lease term | Longer reduces re-letting risk |
| Security deposit | Mitigates short-term default |
| Guarantees | Corporate or personal backing |
| Diversification | Multiple tenants reduce concentration |
| Risk Mitigation | Strategy |
| Credit checks | Mandatory for all tenants |
| Larger deposits | 6 to 12 months rent for higher risk |
| Guarantor requirement | Parent company or personal guarantee |
| Shorter initial term | Annual renewals for uncertain tenants |
| Letter of credit | Bank guarantee instead of cash deposit |
| Insurance | Rent default insurance available |
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