I remember back in the dark ages when I was a youth and got my first job.
I remember the feeling of being at the mercy of the boss… Like, in a way, I lived and died at his whim…
He could sack me any time and I would be without a job and have no money…
In reality it probably wasn't all that serious, but I know I didn't like the feeling of having someone else in charge of whether I had money or not.
It was probably one of the core shifts that made me seek ways to be responsible for my own income.
Some people are best at being employees… I was never one of them.
If you’re reading this, chances are that you’re not one of them either… You’re probably more like me… investor… entrepreneur etc…
But just because you take responsibility for your own wealth and income doesn’t mean you’ve entirely escaped that mindset… Here’s what I mean…
Ive noticed that even with investors that same (employee) mentality still shows up… it just hides in different places.
Here's what I've noticed.
When it comes to commercial property one of the biggest fears is “What if the tenant leaves?”
That one question is one of the main sticking points that keep people from investing in commercial property. I get asked that all the time.
It's basically the same attitude… the tenant has become your boss… they become responsible for your income.
I feel like I need to state clearly for the record – that you should not be afraid of tenants leaving.
There are a couple of obvious things I want to offer up to support my case.
Firstly the lease – commercial leases are a pretty serious contract. If you’ve had your lease written properly then it will be very hard for a tenant to break.
Secondly, if you know what you’re doing you should have a rental guarantee in place. This is a huge deterrent for a tenant to break a lease, and if they do, it’s a huge help for you, to cover you while you find a new tenant.
Now the obvious is out of the way, I think it’s also worth mentioning that a well chosen property in a good area will have no trouble finding a new tenant.
In my course, I discuss some methods I use to find tenants fast. Sometimes it means that I give some incentive to new tenants to get them in… a couple of months free rent (while they do their fit-out), upgrade offers or a lower rent for the first year…(this is not a good strategy though… for other reasons).
Even if you can’t find the right long term tenant you can even go for short term “pop-up” type tenants just to pay for the space while you take enquiries from serious tenants. Just make sure you have the right “get outta jail free” clauses in your short term leases.
It’s easy to get comfortable with a great tenant in place but always keep in mind that they are not irreplaceable. They are not your boss.
I have no hesitation in getting rid of tenants who aren’t up to scratch. If there is a reason you want to get rid of a tenant and you can find cause to drop a “Break lease” clause on them…
Here's a topical example of what I'm talking about…
I just caught one of my tenants who run a cafe dumping the ciggie butts from customers and bags of rubbish on the ground out the back of the shop… It was nasty out there. It stank like piggies and cotton food and it was going to attract rats.
It's not his first warning and at the end of the day that's just not the kind of tenant I want in there…
Don’t let comfort and complacency stop you from taking those steps. Just bite the bullet and find yourself a new, better tenant…
In this case the property is in an area that has massive demand for space so finding a new tenant will never be an issue.
At the end of the day the lease is there to protect you… but you are the landlord… it’s your building and you’re the boss, not the tenant.