Most of the property management training is geared toward real estate investors or asset property managers with discussions of how to actually qualify tenants, the various methods of renewing a lease, and other property management issues and investment Property.
Why shouldn’t tenants have the same property management training advantage when it comes to renewing a lease?
This article is for renters who need some tips on how to renegotiate their existing lease or get better terms with a new lease they are working on, as well as how to renew a lease.
Before I get into the basics of renewing a lease, my suggestion to any tenant is to seriously consider getting the services of a real estate broker and having them work for you on renewing your lease with your landlord. .
Why hire a broker to represent you to renew a lease?
Here are 4 reasons why:
- It usually doesn’t cost you anything to do this, as the landlord will pay the broker a renewal fee.
- This fee is usually less than what it would cost a landlord to find a new tenant.
- The broker has a better idea of what spaces are actually leased for, what concessions are being made, and what really viable space alternatives are.
- Using a broker to represent you can also add some credibility to your cause.
But for this approach to work, for a broker to represent you effectively and expect the landlord to pay you something to renew a lease, you, as a tenant, must negotiate from a position of strength.
A position of strength means that you are a tenant with whom the landlord wants to renew a lease.
We deal with many tenants and here are some common misconceptions tenants have about landlords:
- It’s a renter’s market, so the landlord is lucky to have me as a tenant.
- It is better for the landlord to receive some rent, even if it is reduced, than to have no rent at all.
- The last thing a landlord wants is a vacant space
Having the right mindset and frame of reference is important in any negotiation.
These are the correct perceptions to have when dealing with a landlord:
- The landlord may be lucky to have you as a tenant, but only up to a point. The more value a tenant adds to a property, the more “lucky” the owner will feel. If you’re a tenant who brings traffic to a shopping mall, adds some prestige to an office building, doesn’t require a lot of extra landlord management, and is otherwise “low maintenance,” then your luck index will increase.
- Many times, landlords will choose to pay no rent at all instead of some rent. One reason is that having a tenant costs the landlord money. It may be in additional overhead, or NNN. Or it may be in rental or improvement concessions. Investors buy rental properties for cash flow. If a tenant isn’t contributing to that cash flow, the landlord may well start looking for a replacement tenant, or decide that the time and effort spent on the low-paying tenant isn’t worth it.
- Vacant space, some vacant space, is not always a bad thing. If a tenant is high maintenance, time consuming property management, adds no value to the property, if the landlord starts thinking it would be better to leave the space vacant and roll the dice to find a replacement tenant. , then he probably won’t renew the lease.
Now that we’ve cleared up some of these tenant misconceptions, let’s talk about you as a tenant negotiating from a position of strength and how to renew a lease.
How strong you may be as a tenant or renter will no doubt vary a bit depending on the property you are in as well as market circumstances, however overall here are a few points that are likely to make a landlord look at you. as a solid tenant:
Rent is paid on time or, if a payment agreement is made, you try to do the things you assured the landlord you would do
You are a tenant who does not spend a lot of extra time on property management.
Create site visitors and traffic in the mall or increase the attraction of an office building
You know exactly what the competition is offering, you know all about your particular alternatives, and you can present those involved with a sound, non-threatening approach to the landlord. This is when letting a broker fully handle your case can be very helpful.
Consider the alternatives to the above points
Most of the time I have seen tenants who want to renegotiate or renew a lease, but there is a problem.
The tenant is behind on rent, or hasn’t kept promises they made about rent payment plans, or has wildly unrealistic ideas of what a competing landlord will give them.
Not surprisingly, these are the tenants who don’t get the lease renewal terms they’re looking for or, worse yet, don’t get their lease renewed at all.