Strategies For Tenants On How To Renew A Lease

Tenants Tips For Renewing A Lease

The majority of my topics to date have been addressed to real estate investors or asset managers with the idea of precisely how to actually qualify tenants, the way to renew a lease, or other real estate investments property concerns.

In The Basic Property Management eBook, my first book on property asset management, as well as in The 5 Step House Rental eBook, in which I talk about what to do to rent your investment rental home, you will find chapters on the way to market, to locate excellent tenants, and the way to qualify and continue to keep those tenants.

My article today is produced for our tenant readers who would like to strategize on meeting with their landlord to renegotiate a lease or one that’s about to expire and needs to be renewed.

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Before I get into the specifics of how to renew a lease, let me suggest that you as a tenant should seriously consider hiring a real estate broker to represent you in a lease negotiation with the landlord.

Why Hire a Broker to Represent You to Renew a Lease?

 

Here are four reasons why:

1. It normally costs you nothing to do this since the broker will be paid a renewal fee from the landlord.
2. Usually this fee is less than what it would cost a landlord to procure a brand new tenant.
3. The broker has a better feel for what spaces are actually leasing for, what concessions are being made, and what the viable space alternatives really are.
4. Using a broker to represent you may also add some credibility to your cause.

But in order for this approach to work, in order for a broker to effectively represent you and expect to get paid something from the landlord to renew a lease, you as the tenant need to negotiate from a position of strength.

A position of strength means that you are a tenant that the landlord wants to renew a lease with.

 

We deal with a lot of tenants and here are some common misconceptions that tenants have about landlords:

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

Having the right mindset and frame of reference are important in any negotiation.  Here 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 certain point.  The more value a tenant adds to a property the "luckier" the landlord is going to feel.  If you're a tenant that brings traffic into a shopping center, adds some prestige to an office building, doesn't require a lot of extra management from the landlord and who is otherwise "low maintenance", then your luck ratio will increase.
2. Many times landlords will opt for no rent over some rent.  One reason is that having a tenant costs the landlord money.  It might be in additional overhead, or NNN, expenses.  Or it might be in rent or improvement concessions.  Investors buy rental property for the cash flow.  If a tenant isn't contributing to that cash flow, the landlord may very well start looking around for a replacement tenant, or decide the the time and effort invested in the short-paying tenant isn't worth the return.
3. Vacant space, some vacant space, is not always a bad thing.  If a tenant is high maintenance, sucks up a lot of property management time, doesn't add value to the property, if the landlord starts to think that she might be better off having the space vacant and rolling the dice on finding a replacement tenant, then she probably isn't going to renew a lease.

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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 solid you might be as a lessee or tenant will undoubtedly vary a bit according to the property you happen to be in, as well as the market place circumstances, however in general here are just a few points that will likely make a landlord view you as a solid lessee:

• Rent is paid promptly, or in case a payment arrangement is created, you attempt to do the things you assured the landlord you would do
• You are a lessee that doesn’t take up a great deal of additional property administration time
• You create site visitors and traffic into the shopping mall or increase the attraction of an office building
• You recognize just what the competition is providing, you understand everything about your particular alternatives, and may present those involved with a strong, non-threatening method to the landlord.  This is when allowing a broker to fully handle your case may well be very helpful.

Think About The Alternatives To This

Time after time we’ll have tenants who wish to renew a lease, yet they are in arrears with their own rent, haven’t kept promises made about payment plans, or have impossibly unrealistic thoughts of the items other landlords will provide.

Those are the tenants that do not get their leases renewed or in the event that they do, do not get the conditions they may be seeking.

As with my other articles on this site, I sincerely hope you’ve found the tips on how to renew a lease useful.

Jeffrey Roark

Property Management Training

How To Rent My House