|
 Negotiate To
Win
By Dale
Willerton
In
lease negotiations, you’re up against a pro—here’s how to even
the odds.
Negotiating
a good lease or renewal can be challenging for most dance
studio owners. Many tenants go through the leasing process
only once or twice in their lifetimes, yet in negotiating a
lease they have to go head-to-head against experienced real
estate agents and landlords who do it every day. As a
certified lease consultant, I have coached and negotiated for
dance studio renters all over the country, and I’ve put
together some tips that are geared especially for them. If
you’re a dance school owner with a lease negotiation in your
future, whether it’s for a new location or a renewal, these
practices can boost your bargaining power and consequently
save you money.
Negotiate to win.
All too
frequently, dance studio owners enter into lease negotiations
unprepared and do not even try to win the negotiations. But
with big commissions at stake, you can be sure the landlord’s
agent will make every effort to do so. It is OK to negotiate
aggressively. Remember, if you do not negotiate to win, you
won’t.
Be
prepared to walk away.
Try to set
aside your emotions and make objective decisions. Whoever most
needs to make a lease deal will give up the most concessions.
A good dance studio in a poor location will become a poor
dance studio.
Realtors—friend or foe?
Real estate
agents or brokers typically work for the landlord who is
paying their commission. It is the agent’s role to get the
highest possible rent for the landlord, not the best deal for
the tenant. The higher the rent you pay, the larger the
agent’s commission. If you are researching multiple
properties, try to deal directly with the listing agent for
each one rather than letting one agent show others’ listings.
Your tenancy will be more desirable to the listing agent if he
can avoid splitting his commission with another agent.
Never
accept the first offer.
Even if it
seems reasonable or you have no idea what to negotiate for,
never accept the leasing agent’s first offer. In the real
estate industry, most terms are negotiable and the landlord
expects you to make a counteroffer.
Ask for
more than you want.
If you want
three months of free rent, then ask for five months. No one
ever gets more than they ask for, but you should be prepared
for the landlord to negotiate with you. Don’t be afraid of
hearing “No” from the landlord— counteroffers are all part of
the game.
Negotiate the deposit.
Large
deposits are not legally required in a real estate lease
agreement. Deposits are negotiable and often serve to
compensate the landlord for the commissions they will pay to
the realtor. If I am handling a lease renewal for a
tenant/client with a landlord who already holds a deposit from
them, I will negotiate to get that deposit back.
Measure
your space.
Tenants
frequently pay for phantom space. Most tenants pay rent that
is based on square footage, but often they do not receive as
much space as the lease agreement states. Just last month a
dance studio owner thanked me for saving her $9,000 because I
had recommended that she measure the rental space.
Take
your time.
The leasing
process is just that—a process, not an event. The more time
you have to put the deal together and make counteroffers, the
better your chances of getting what you really want. Too often
studio owners try to hammer out a deal in a two- or three-hour
marathon session. It’s more productive to negotiate in stages
over time.
Get
help.
Unless you
have money to throw away, it pays to educate yourself. Reading
about the subject will open your eyes to smarter negotiating
tactics. And don’t forget to have your lease documents
professionally reviewed before you sign them.
Avoid
personal guarantees.
A personal
guarantee is a provision that names a guarantor who is held
responsible for the payment of all the amounts of rent and
additional rent as set out in the lease. Therefore, if you, as
the tenant, enter into a lease agreement under your own name,
you are responsible for paying rent, even if your business
fails. Protect yourself and your personal assets by forming a
separate corporation and listing it as the tenant rather than
yourself. If you do agree to a personal guarantee, ensure that
you cap it at a maximum amount and stipulate that it will
decrease each year that you pay rent. With thousands of
dollars in rent at stake over the course of a lease term, you
cannot afford to gamble. So get savvy and get a better deal.
In leasing, tenants don’t get what they deserve; they get what
they negotiate.
Send
Page To a Friend
|
