Mastering The Art of Negotiation: Local Mom-and-Pop vs National Tenants

Introduction

Real estate investing is a multifaceted venture that includes the art of negotiating leases with tenants. One important aspect that every investor should pay attention to is the type of tenant they are dealing with. This article will delve into the different approaches needed when negotiating with local mom-and-pop tenants as opposed to national tenants. These two categories of tenants have distinct characteristics that require different negotiation strategies.

Local Mom-and-Pop Tenants

Local mom-and-pop tenants are small, locally-owned businesses, often run by families. These types of tenants are usually more flexible and easier to negotiate with because they often have a personal interest in the property and the surrounding community. Here are some tips for negotiating with local mom-and-pop tenants:

1. Establish a Personal Connection: Building a relationship with your tenant can make negotiations smoother. Get to know them and their business, show empathy, and be genuinely interested in their success.

2. Be Flexible: Local tenants may not have the financial backing that national tenants have. Be prepared to be more flexible with lease terms, rent increases, or improvement allowances.

3. Consider the Local Economy: Understand the local market and economy. This will help you to negotiate terms that are fair and reasonable for both parties.

4. Provide Support: Offering assistance, such as helping with marketing or improving the property’s façade, can make your property more appealing to local businesses and can foster goodwill during negotiations.

National Tenants

National tenants are large corporations or franchises with locations across the country or internationally. Negotiating with national tenants often involves dealing with a corporate representative or a legal team. Here are some strategies for negotiating with national tenants:

1. Be Professional: National tenants are used to dealing with professional property managers and landlords. Make sure you are well-prepared, organized, and professional during all interactions.

2. Understand Their Needs: National tenants often have specific requirements for their locations, such as visibility, parking, or access to transportation. Make sure you understand their needs and can meet them with your property.

3. Leverage Your Property’s Strengths: Highlight the strengths of your property and the surrounding area that make it an attractive location for the tenant.

4. Negotiate Strongly: National tenants often have more negotiation power due to their size and financial backing. However, don’t be afraid to negotiate strongly on your terms, such as rent, lease length, or tenant improvements.

Conclusion

Negotiating with tenants is a crucial skill for any real estate investor. Understanding the differences between local mom-and-pop tenants and national tenants can help you tailor your approach and negotiate more effectively. Building relationships, being flexible, and understanding the tenant's needs are key strategies for successful negotiations with both local and national tenants.