Most of the property management training is geared toward real estate investors or asset property managers with discussions of how to actually rate tenants, the various methods of renewing a lease, and other real estate investment and management matters. of properties.

Why shouldn’t tenants have the same property management training advantage when it comes to renewing a lease?

This article is for tenants who need some advice 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 talking about the nuts and bolts of renewing a lease, my suggestion to any tenant is that you should seriously consider getting the services of a real estate agency and having them work for you on a landlord renewal.

Why hire a broker to represent you to renew a lease?

Here are 4 reasons why:

1. It usually costs you nothing to do this, as the landlord will pay the broker a renewal fee.
2. Typically, this fee is less than what it would cost a landlord to find a new tenant.
3. The broker has a better idea of ​​what the spaces are being rented for, what concessions are being made, and what are really viable space alternatives.
4. 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 that tenants have about landlords:

1. It is a tenant market, therefore the landlord is lucky to have me as a tenant.
2. It is better for the landlord to get some rent, even if it is reduced, than to have no rent at all
3. The last thing a landlord wants is an empty 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:

1. 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 are a tenant who brings traffic to a mall, adds some prestige to an office building, doesn’t require a lot of additional landlord management, and is otherwise “low maintenance”, then your luck rating will go up. .
2. Many times landlords will choose not to rent a portion of the rent. One reason is that having a tenant costs the landlord money. It can be in additional overhead or NNN. Or it could be in rental or improvement concessions. Investors buy rental properties for cash flow. If a tenant is not contributing to that cash flow, the landlord may well start looking for a replacement tenant or decide that the time and effort invested in the low-paying tenant is not worth it.
3. Empty space, some empty space, is not always a bad thing. If a tenant requires a lot of maintenance, takes up a lot of property management time, does not add value to the property, if the landlord starts to think that they could be better off if they had the vacant space and rolled 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.

The strength you may have as a tenant or tenant will undoubtedly vary a bit depending on the property you are in, as well as market circumstances; however, in general, here are some points that are likely to make the landlord see you as a solid tenant:

Rent is paid immediately or, in case a payment agreement is created, try to do the things that you assured the landlord you would do.

You are a tenant who does not spend a lot of extra time managing the property.

Create site visitors and traffic to the mall or increase the appeal of an office building

It recognizes exactly what the competition is offering, understands all about their particular alternatives, and can present those involved with a robust and non-threatening method for the homeowner. This is when allowing a broker to fully handle your case can be very helpful.

Consider the alternatives to the above points

Most of the time I have seen tenants want to renegotiate or renew a lease, but there is a problem.

The tenant is behind on rent, or has not kept promises made about rent payment plans, or has absurdly unrealistic ideas of what a competing landlord will give them.

Not surprisingly, these are the tenants who are not getting the lease renewal terms they are looking for, or worse, who are not renewing the lease at all.