Power Struggle: Pay Less for Rent

An amazing thing happened when everyone was certain that Mobile was going to receive the contract to build the KC-45 tanker aircraft, real estate was being snapped off the market like BOGO coupons for diapers.  Lots were cleared and in weeks, huge warehouses and apartment complexes appeared just glowing with anticipation.  Then, the devastating news arrived that the contract was voided.  Now, everywhere you look, there are apartment complexes (some still being built) and office spaces with empty parking lots.  The radiance of an economic promiseland has been replaced by the dust of vacancy.

Without meaning to sound joyful over this situation, because I am among the crowd that feels we were jilted from something that was rightfully given to us, you can use this to your advantage.  Whether you are thinking about finding new office space for your business or you are up for renewal on your apartment lease, the market is yours for the taking!

How to you know if you are prepared for this power struggle?

1. If you credit is excellent, good or (at least) better than everyone else looking for a place to hang their hat, you have a great chance of lowering your monthly rent.
2. If the place you are considering has at least a 20% to 30% vacancy (some vacancy rates are significantly higher, you have a great chance of lowering your monthly rent.
3. If you have faithfully paid your rent on time and want to stay in your current location, you have a GREAT chance of lowering your monthly rent.

Here is what you should know about the weapons in your arsenal and how to use them:

• Credit Rating ~ The majority of tenants out there are tenants because they either do not have the money to buy or their credit disqualifies them for a loan.  Leasing agencies consider those with an average to above average credit score a better fit for their community because they anticipate that you will pay your bill when due.

The company will pull your credit when you apply so you do not need to worry about proving that to them but a glowing letter of recommendation from a former landlord speaks volumes.  So, pad your application with a well-written letter from your former leasing agency and tell the rental agent in front of you, “My leasing agency really wanted me to stay with them. They said I would be welcomed anywhere since I never cause problems and my rent is always on time. My question to you is this… what kind of deal are you willing to offer me to ensure that I choose this space?”

• Vacancy ~ An empty apartment or office means that no revenue is being generated.  A leasing company will often be willing to give you a large discount just to have some income associated with that property.  The longer the space has been vacant, the more room you have to negotiate.

If you are approaching a company that is at capacity or always has a waiting list, be prepared to pay the asking price.  However, if the sapace has been vacant for six months or longer, the door is open.  Do not be afraid to ask when the last tenant moved out.  Do not tell them why you are asking but tuck this bullet in your gun for when you are sitting down to crunch numbers.  When you are talking about the price you can say, “If this place has been vacant for seven months, it makes me wonder if there might be something better out there.  Are you willing to lower the price?”

• Permanence ~ If you have paid your bill when due (or at least before getting the warning of a late bill), the leasing agency likes you!  In these economic times, they will bend over backwards to keep a faithful tenant.

A rate increase is almost inevitable from year to year, but if you have noticed the community is struggling to retain tenants or if there has been trouble in the community, you can use your upstanding status to your benefit.  Remind your leasing agency in writing of your history with them and request a lower rate.  Then, follow up with a phone call.

You have the upper hand in this power struggle but it is easy to make mistakes:

1. NEVER ~ let on about how much you like the property.
2. BE WILLING ~ to walk away at the first meeting to prove a point.
3. ALWAYS ~ be polite.
4. AVOID ~ sounding arrogant even as you brag on yourself.

You can do this.  Believe that you can do this.  What is the worst thing that could happen?  They say, “No.”  Then go somewhere else or pay the asking price.  There is no shame in that.  You just never know what might happen until you try!