CHICAGO — From day one, open communication and a clear understanding of responsibilities under a commercial lease are vital for keeping both parties happy.
And in the self-service laundry business where many store owners rent their real estate, the quality and length of a lease can make or break an operation. At its core, everything hinges on developing a positive landlord-tenant relationship.
Part 1 of this article examined what a laundry owner should be looking for in hopes of establishing a solid relationship with a prospective landlord.
In today’s conclusion, we’ll look at relationship-building tips, plus some warning signs that things could get rocky.
A little web research turned up 10 tips for a healthy landlord-tenant relationship, things like submitting completely accurate rental applications, asking the right questions, getting any landlord statements or promises regarding the property in writing, and paying your rent on time.
The store owners we interviewed agreed it was a good list and offered a few other pointers:
Steve Andrews, who’ll celebrate the first anniversary of his store called The Wash House in Nashville, Tennessee, in December: “Use a good broker to assist you in finding the right location, and use a good lawyer to review the lease verbiage.”
Elizabeth Wilson, owner of Suds Laundry in Memphis, Tennessee: “Make sure to have some type of arbitration clause. What happens when the landlord doesn’t take care of the property like they should? Can you withhold rent?”
Dave Menz, who owns four Queen City Laundry stores in Cincinnati, Ohio, and is building a fifth: “I would add that you should try to put yourself in their shoes. One of the most valuable skills that I’ve found in business is to genuinely care about the person across the table from you. In most cases, it’ll show through if it’s genuine and sincere.”
John Giambrone, owner of LaundryTime in Colorado Springs, Colorado: “One factor that has impacted me is the availability of the property manager. I have to advocate for any and all repairs made, even to the public areas such as lights in the parking lot, because our property manager only comes when called. Also, keep a signed copy of your lease near to hand. I have faxed my lease to my landlord several times when they have assumed that my terms were the same as other tenants on the property.”
A lease spells out what’s expected from both parties. How much does a tenant’s understanding of the terms contribute to building a good relationship with the landlord?
“Understanding the terms and coming to an agreement on the terms sets up the parameters for any communication and activity going forward,” Andrews says. “You should also understand any verbiage that protects you and your business.”
“There is nothing quite like the bitterness that comes from finding out that your lease was not written in your best interest,” Giambrone says. “Always have a lawyer go through your lease, and a distributor who has seen a lot of them. After that, read it yourself and ask questions. Then reread and reread so you have a clear understanding of the terms. Don’t be afraid to rewrite a section so that it is more easily understandable, especially if it is written in jargon and legalese.”
Sometimes, there are signs that a landford-tenant relationship might be rocky.
“I think the signs are the same as most other relationships,” remarks Menz. “Are they cordial and polite or are they cold and distant? We also think it’s very valuable to have and maintain good relationships with the other tenants. Speak to them regularly, ask them how business is going. If they start to complain, really listen to what they’re saying.”
“I believe that if the landlord is all of the sudden getting more involved and communicating frustrations and issues more often, then that is a red flag,” warns Andrews. “A tenant should always be respectful of a landlord’s requests and/or questions but also be protective of their business. Never lose your temper or let your emotions cause you to say or do something that might hurt your business. The key is to remember that you are using their building to make your living.”
While talking primarily about new leases, Tim Kerstetter says we shouldn’t forget about their termination. Kerstetter owns and operates five Laundromats in central New York, including Super Clean Laundry in Auburn.
“I think as important when commencing a new lease is the termination of a lease, and to be sure that it is clearly written in the procedure for decommissioning a laundry,” he explains. “For example, the utility infrastructure is often removed after a laundry closes, but if after the life expectancy of the washers and dryers (is met), can it all just be left behind? What about the dryer vents going through the roof?”
And let’s not discount taking a rent-to-own approach, if possible.
“Try to always find opportunities where you can own the property either now, or at least an option in the future,” he suggests. “This takes all of the things we talked about out of the equation.
“Also, try to find projects where the landlord understands the value of having a long-term anchor tenant like a modern Laundromat. In those cases, they will always seek to please you. Having a bad landlord is a nightmare, having an absent landlord is almost as bad, having a good landlord is good, but being your own landlord is ideal!”
If you missed Part 1, you can read it HERE.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].