Wednesday, March 16, 2016

Talk to Your Tenant: Win-Win is Better Than Lose-Lose, Right?






Years ago, there was a small, remote island that was relatively non-descript and unnoteworthy.  Then two multi-billion dollar pharmaceutical companies decided their business’s future hinged on acquiring it.

 

Why?  Its climate and soil composition was ideal to grow a certain tree that had revolutionary medicinal value.  The pharmaceutical companies needed to harvest and grow and lot of these trees and this was the only place where they could find the perfect conditions to do so. 

 

So what happened?  These heavyweight industry titans went after each other to procure this island resulting in a bidding war (hundreds of millions for dollars over a nominal asking price), lawsuits, threats, and tons of bad blood.  After millions had been spent and not one tree had been harvested after a year, a level-headed senior executive suggested the use of a mediator.  People had their doubts because the companies were so tight-lipped about trade secrets; they wouldn’t divulge anything about their intended use of the trees.

 

As the story goes, the mediator ironed out a deal within an hour.  All lawsuits were dropped, conversations turned from sharply bitter to excitedly collaborative, and the rivals eagerly bought the island together in joint ownership.   They were both in production within 6 months.

 

What happened?  Both pharmaceutical companies still needed the trees, but the first only needed the leaves the other only needed the bark.  Once this was discovered, both pharmaceutical companies were in business!  Adversaries became profitable allies.

 

It was a pretty simple solution, right?

 

Communication is important, especially in the property management business.  And, conversely, non-communication can be very expensive and time consuming!

 

A rental relationship can thrive with good communication and turn seemingly lose-lose arrangements like a tenant needing to get out of his lease into win-win situations.  Here are a few examples:

 

A tenant wanted to get out of his lease early due to a job loss during the spring and the owner wanted to sell.  This turned out well as the tenant paid an extra month of rent to terminate their lease and the owner had a vacant month paid for while the home was being fixed-up during an active spring/summer sales market.

 

Or a tenant was a landscaper and needed an extra month to vacate.  The owner wanted to sell immediately, but allowed for an extra month of renting.  For this negotiation, the tenant landscaped the yard for free before vacating.  This gave the tenant the time they needed, while saving the owner money for fixing up the yard.

 

These types of win-win negotiations are only possible when landlords and tenants talk and find out the best path forward together.  A good property manager makes sure that these issues are fleshed out and potential solutions are vetted thoroughly.

 

Anyone can take a hard line on a lease and impose their will legally.  But this is rarely the best and most profitable path.

 

As a postscript to the initial story, the big loser was the owner of the island.  Through incomplete information, the island owner almost achieved a huge, unnecessary payday.  In the property management sphere, the island owner is usually the lawyers who are paid to enforce the lease.

 

So talk to your tenant!  Good things can happen and can turn seemingly lose-lose scenarios into win-win.

 

Happy landlording! 

 

Brett Furniss is the head property manager of BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management.   BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales for single-family homes, Uptown condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!

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