Aren’t recessions great? We get to see those testosterone fueled guys on Wall Street cry like babies on television. We suddenly get rebate checks from the government. We now receive résumés from those unemployed geniuses who once demanded salaries too high for us to pay.
And finally, real estate may now be more within our reach. In many parts of the country prices have declined enough to gives those of us who have enough money squirreled away the chance to buy some property, or at least lease some prime space in once unheard of locations. But there’s still a big challenge. The prices may be lower. But I’m not getting any smarter. I had a hard time understanding the plot of “Avatar.” So can an intellectually challenged penny pincher like me still get a good deal?
Probably. But I’m going to need some help. Penny pinchers are not property experts. We’re experts in our own businesses. Finding the right location is an art, not a science. We may think we know the area, but we don’t have the time to really study it in detail. Prices may have come down, but that still doesn’t guarantee we’re getting the best deal possible. It’s critical to use someone who knows the market.
“We enjoy a healthy relationship with most every significant Realtor, developer and landlord in the industry,” said John Devine, president of Subway Real Estate Corp. of Milford, Conn. “These people know who we are and how we operate. Solid relationships often make the difference between getting a deal and losing a deal.”
Easy for him to say, right? Subway Real Estate negotiated over 2,000 new leases last year alone. That’s a lot of turkey subs. Subway knows that its 25,000 franchisees are not real estate experts. They’re sandwich makers. In most cases, Subway does the real estate work, leases the properties, and then sub-leases them back to their franchisees.
We don’t negotiate leases for a living. We’re not up to speed on the terminology. The minute an experienced landlord gets a whiff of my ignorance he’ll be selling me a house next to those kids from “Jersey Shore.” Smart penny pinchers need to get someone to represent us. Even with all the resources of Subway, Devine knows that the right people will make or break the deal. Among his stable of experts is a good legal team.
I know a lot of good real estate attorneys. Yes, they practice devil worship. But really, that’s only in the evening. During the day, the guys I know also do a fine job creating and reviewing contracts. They are specialists who represent both landlords and their tenants. Like Subway, it’s critical for us to employ a competent attorney. No do it yourself form that we download for free from the Internet is going to replace that kind of expertise. You can find a good attorney that specializes in real estate at your State Bar Association’s website. Or gathering near Stonehenge during the Solstice.
But we don’t need experts to handle everything. There are some things we can do on our own. For starters, we can get to know a potential landlord really, really well.
“We go into each location with the notion that this needs to be a long term mutually beneficial relationship.” Devine told me. “We look for a landlord who has a great property and a great reputation.” Like Devine, we can also ask for references and talk to his other tenants. We can walk around his property at various times of the day and judge how well he keeps it maintained. Most importantly, we can spend some time with him, have a lunch or two, and look him in the eye. We can say to ourselves “My livelihood is going to reside in this guy’s building for the next five years so do I trust him to make sure the roof doesn’t fall in?” A great deal on a new property won’t be worth much if it rains in our reception area.
“Primarily, you need to be concerned about whether the landlord has the economic viability to maintain the property in a first-class condition,” said Bob McComb, a real estate consultant, author and speaker. ”Really make an effort to personally know who you’re dealing with. “
Finally, we can behave ourselves. That’s definitely in our control. People like to do business with people they like. Duh. Concessions are made when one party wants to have a long term relationship with another. The real estate industry, like any industry, is a close circle. People know each other and they will soon know us. Being a jerk might intimidate some, but in the long run will never get us the best deal, no matter how attractive the price is.
Where can a penny pincher find this kind of help? McComb suggests trying the Society of Office and Industrial Realtors (www.sior.com) for office and industrial transactions. He also points out that many retail brokers are members of the International Council of Shopping Centers (www.icsc.org). “Business owners should look for commercial and real estate companies that dominate the market. Call them and ask the manager for the name of their top agent or broker. They should avoid residential brokers seeking the occasional cross over to commercial.”
Don’t get into this uneducated. Read up on real estate leases. Go to a negotiating class. No one’s going to expect you to become an expert. But to properly manage these important people you’re going to have to know what they’re doing. Or at least know enough to supervise so you can leave the details to them. McComb’s book “Navigating Commercial Property Leases” is a great reference.
“Solid relationships often make the difference between getting and losing a deal,” Devine said. It’s the people, not the prices, that will turn a good deal into a great one.