I have an office in the best commercial building in town that i rented out to a friend 2 years ago. at the time the market rate rent was $1000/pm and I gave it to my friend at 825. Last year he didnt increase the rent and in the past 2 years rent and property has gone sky high. His lease expired in May and he’s been handing my manager rental checks with a 15% increase all this time that we dont cash and send back to him. yesterday I took and agent and prospective tenant to see the place and my friend called me up. We’re asking $1625/pm and the agent says the new people are interested in taking it on. Meanwhile my friend says he’s spent $100k in doing the interiors and he thought he would stay there on a very long term rental etc etc. He’s agreed to come up to $1000/pm but thats still leaves me $7000 out of pocket for the year in addition to the discomfort of doing all this with a friend. What is the faitr thing to do? I indicated a rent in the range of $1250-1350/pm with aggressive rental increases in the next year might be acceptable but he doesnt seem willing to come up. Do I chuck him out? Obviously someone getting a prime office at 40% below market is going to fight tooth and nail to stay there no matter who the landlord is, but I do feel he’s taking advantage of the friendship and the fact that my wife and I are soft when it come to these things. Whats the right thing to do?
Get rid of the friend. He is making money, why should’nt you?
Sounds to me like you are being taken advantage of. You have to remember there are no friends in business.
Cheers
ToniThis friend is not a friend, otherwise he would be paying fair market rent. He has no respect for your friendship. Say Goodbye.
Rgards,Sharon
You can do it landgrabber, be strong.
He’s taking advantage of the friendship so shut the door.
Regardshttp://www.owner.com.au
http://www.owner.com.au/phototour/listing_phototour.cfm?listingid=22315turf the `friend’ out!
Hello landgrabber,
I think deep down you know what to do; you don’t need our permission to do it.
Your comfort zones will be pushed and you will feel uncomfortable: embrase the challenge, follow it through, and learn from the experience.
Good luck,
DSVR
PS You may need to throw these words back to me one day![biggrin]
Debbie-Sue Van Rangelrooy
Hi Landgrabber
Sounds like an awkward situation. Your “friend” has spent a lot of money on the place expecting to be there a long time. That sounds like his main argument.
I think what I would do in that situation is this: tell him that since you value his friendship, you are willing to continue his tenancy at a 15% discount to the current market rent. So that would be $1400 or whatever. Don’t negotiate with him. Put it in a letter and if he doesn’t want to play, then obviously he doesn’t value your friendship or generosity. Leave it with a PM to evict him if it’s too uncomfortable for you and wash your hands of him.
How good a friend is your friend? Have you had a good long term friendship with him? If he has spent $100K how much value has he added to the premises? What is a fair settlement on the money he has put in?
If this person wasn’t a friend what would you do?
Friend or not it is reasonable to have a fair and equitable outcome for both parties. Your friend may have a legitimate argument if he has added value. If you value your friendship above your investment then you may decide to take an “acceptable” reduction. Alternatively if the friendship is not that important then you are free to determine a fair agreement for any value added. Once that decision has been made it then only remains to determine which tenant and at what rental.
Good luck
pr
Hmmmm,
This one will take a lot of thought to get to the bottom of. OK, from where I sit here, the only hard fact is the following ;
You had a formal lease between Lessor and Lessee which has since expired in May.
As with all business situations with CIP’s, it depends on what is exactly written in the lease.
Specific questions that comes to mind are ;
1. Was there an option period associated with the lease ??
2. What was the notice period to renew lease – 3 months ??
3. What transpired – if anything – during the notice period. You’ll be kicking yourself if no formal paperwork was exchanged.
4. What does the lease say about the Lessee adding improvements to the building, if your lease doesn’t have a clause in their stating explicitly all the improvements remain with the property – you’re hooped.
5. I presume it has rolled over since May onto one of these ‘furry’ monthly agreements. You aren’t in the same fluffy arena as the Residential tenancies.
6. Your ability to evict the Lessee will be long and arduous if he won’t shift…and on his current deal why would he ?? I’m talking 8-10K in solicitor’s and bailiffs fees, 5 to 6 months of dragged out confrontation with no rent – typically headed for the Supreme Court for a ruling and then another 3 weeks for the bailiffs to move in and change locks. Then another 4 weeks of clean up if he leaves all of his non-essentials there. Yes….I’m speaking from very recent identical experience.
7. I guarantee you by the time he is out and a new tenant is signed up on a new lease, you’re talking 8 months as a minimum with not a jot in income and lotsa expenses.
8. Your Lessee’s motivations are almost diametrically opposed to yours.
9. Put it down to school of hard knocks tuition fees.My only tips are quite useless at this stage of proceedings. You should of posted something in February at, presumably, the start of the notice period.
1. Don’t play big boys games with your friends with a fluffy attitude.
2. Have deep pockets. You probably know deep down you’re going to need them.
3. Get the paperwork ball rolling immediately.Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Dazzling is got a bid point
golubov
meant “Big Point”
golubov
GREAT advice dazzling
We renewed the lease retroactive from may 2005 to may 2006 at $1175pm. After inconclusive talks in person and on the phone I sent him a letter asking for $1350 or we would need him to vacate by August 30th. He’s been paying $875 so $1175 is acceptable and big jump for him. I have howver decided to let 2-3 months pass and then sent him a letter saying we will not be renewing the lease next May so he should make plans to vacate..interiors and fittings are his..I just want my hall of an office back.
Its been distateful..lesson learned, never rent to a friend. You end up learning things about them you’d rather not know.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
