How to Effectively Negotiate a White Box Lease
Audio Transcription
Learn from America’s number one business coach Clay Clark how to effectively negotiate a white box lease. These 5 steps will help you thrive when leasing.
SHOW NOTES:
The Five Steps to Effectively Negotiate a White Box Lease:
1. Assume that everything within that lease is written to manipulate / take advantage of you
2. Use a broker to help you proof the lease
3. Proof the final version of the lease before signing, even if you already believe that you have read it.
4. Real estate people are notorious for changing the final printed version right before you sign it and after you have already negotiated
5. Make sure that Landlord is paying for the major repairs (air conditiiong, plumbing, if not 1 ac unit issue can kill your cashflow)
Welcome into the man-cave. It’s Josh Merrill here, excited about another Thrive Time Podcast. I’m here with America’s number one business coach, it’s Mr. Clay Clark. And business coach, Clay, we’re going to jump right into today. Today, we’re talking about how to effectively negotiate a white box lease. Kind of sounds like a hotline bling. A little bit. So what’s happening is, we have a Thriver who is asking, “Hey look, I’m a leasing a space. I’m trying to figure out how to negotiate my white box lease.”” That means you’re leasing a space where all it has is a white box. It has white walls, its got the framing up. It usually has sheet rock up. That’s about all it has. And he’s wanting to know how do you do it? What are the details of how I go about leasing a space. We’re going to break it down for you like fractions. We’re going to break it down in a way that is so detailed, that when you finish listening to this training, you’re going to go out there and lease a white box, just like you wouldn’t believe. And you’re also going to know so much about the hotline bling lyrics from Drake, that really with the combined knowledge of both of those things, you are like a cornucopia of awesome. And you’re going to enter into the blender of knowledge right here. So Josh, let’s go get started with our first main principle.
You’ve got to assume that everything that is written within that lease is written to manipulate and take advantage of you. That’s just the real talk. Have you signed a lease, buddy? Yeah. Really? For a car, a house, what did you do? I’ve never done a car, but I’ve done this. A white box lease. Have they ever put some crazy stuff in that lease? Man, who knows what was in there. I’m serious, have you ever seen that? I got a lease back in the day, I remember signing and the guy goes, “Hey listen, in this lease, it’s what we call all inclusive. And what that means, is if there is any damage in this building, it is taken care of by the owner. That is why it’s a little more, but it’s all inclusive. It’s all one flat rate. It’s all taken care of.” And I did what? Trusted him. I remember the first time I called, the first time there was a problem. “Yeah, I was calling because you said everything was included in my lease and I had the AC go out and I was just wondering if you guys could take care of it right away?” And the owner was like, “Um no. That’s actually not taken care of in your lease.” “You guys said that was included, you know? So when are you going to come out?” “When we said that it was all inclusive, that does not include major mechanical.” “So how much is that?” “It would be like $25,000.” “Now if you can’t afford to fix that, we can add it on to the lease. We add a $10,000 up front.” So it’s the deal of I had no idea that that could even happen and all of a sudden, I got blasted with my first business expense of all time in my first couple of months in a lease. True story, not good. We got a great notable quotable here from Andy Grove. There’s a great story here on Andy Grover, Clay. Would you like to tell us who Andy Grove is? Andy Grove is a guy that escaped from the communist controlled country at the age of 20. And he moved to the United States and finished his education. He ended up becoming the CEO and one of the founders of intel. So anyway, that’s intel and those guys make processors for computers. So all I’m saying is that Andy Grove, he has this awesome quote. He says, “only the paranoid survive.” Okay, so in business, you can’t just be the guys that go, “Okay, take me to your pen. Where can I sign that?” You can’t. You’re going to get hosed.
Alright business coach, step number 2. Use a broker to help you proof the lease. Yeah, a lot of people say, “Yeah, use a broker if you want to be broker.” The thing is that there are a lot of people say these stupid statements. Well, no. A broker has a legal obligation if they’re signing a contract to represent you as the buyer or the tenant, to look through that lease and to make sure that you’re not missing key things that could really really hurt you and your business long term. It seems like kind of the same process as not representing yourself in court. I don’t know why you would do that. But the thing is, some people I know everything about business, I know everything about Tom Brady and do not use a broker because a broker makes you broker. Got a notable quotable here. This is just from a real estate broker. “A real estate agent is a person that acts as an intermediary between sellers and buyers of real estate/real property and attempts to find sellers who which to sell and buyers who which to buy.” So what is a real estate broker? A real estate broker or an agent is a person who acts as an intermediary. What they do, is they work between the seller and the buyer to help negotiate that deal. They’re looking through the contracts all day, every day. My only advice with the broker, don’t use a new one. Use someone that has been around for awhile. Make some calls. If they don’t have ten references, peace out. If they don’t have ten references, move on to another broker. You see what happened there, is I was reading that as a notable quotable, but it’s actually a definition.
So here we go, Business Coach. Number 3: You’ve got to proof the final version of the lease before signing, even if you already believe that you have read it. You’re going to be believe that you read it. You’re going to believe that you know what you’re talking about, that you don’t need to read it again because you’ve already read it. Let me tell you what. After you have read the final changes, you know what they do? They always make more changes after you’ve read the final version and they add in a little move. It actually happened to Christopher Columbus when he was making his move to come over here to discover the Americas. They sent him back a final agreement, after he agreed and they changed it. Otherwise, he would’ve owned 10% of the land. My main man Christoper Columbus. True story. He missed out on 10% of the land. Don’t let that happen to you. Read that lease one more time. When we come back, we’re going to tell you how to effectively negotiate a white box lease. We’ve got step number 4. You don’t want to miss it. So stick around. It’s the Thrive Time Show. We’ll be right back.
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We’re back. We’re talking about how to effectively negotiate a white box lease. We’re on step number 4 here. Which is, real estate people are notorious for changing the final putted version, right before you sign it and right after you have already negotiated. It looks like I have done something here. And which is I have repeated myself. This is big. Step number 3 is you want to proof the final version before signing it, but I’m telling you. They are notorious. So you’ve got to understand, this is what they’re known for. This is what they do. This is how they do it. So what’s going to happen is, if you don’t take the bull by the horns here, bad things are going to happen to you. That’s why I have a notable quotable from the history.com people. I referenced it early, but I’m going to get into it now. it says here, “Columbus wanted fame and fortune. Ferdinand Isabella wanted the same, along with the opportunity to export catholicism to lands across the globe. Columbus at about catholic was equally enthusiastic about this possibility. So Columbus had this contract with the Spanish that he could keep 10% of whatever riches he found, along with a noble title and the governorship of any lands that he should encounter.” You know what? They change the contract after homie had agreed to it. That is how it works. Don’t let it happen to you. They’re going to give you big long nasty leases. How long was your lease that you signed? I did a year long. How thick was the document? Too thick. Was it like ten pages? It was like fifteen. We used to have a company that was called Fears And Clark Realty Group. We used to do realty for major major coke corporations all across the planet. We did Borders the bookstore. We did big big companies. And what happened was. I’m just telling you this is what happens. Almost every single time, somebody would take the lease that we would agree to and it would go from like 15 pages, to be like 36 pages. They keep making it longer. And why do they do that? So they can sneak more stuff in there. That’s right. Like a bill. The thing is, they just throw it in the bill. They make a huge 700 page bill. Congress passes this new law. They say, Hey read this new law. We’re going to pass it in like 8 hours. We’re going to pass it in like 8 hours. Please read it. Then people can’t possibly read all of the details in it and thats what happens. Not good. Don’t let it happen to you. Read that best. That is how you do it. That is exactly the thing. You’ve got to do it twice. That’s why it’s in there. You really have to got to look over that thing because that is how they do.
Number 5 here, business coach, Clay, Number 5: Make the sure the landlord is paying for the major repairs. We’re talking air conditioning, plumbing, if one AC unit goes out, that could kill your cash flow. Yeah, I mentioned it earlier just a little bit, but you have to make sure that this stuff is included. If you start a business, if you’re growing a business, I’m not sure the situation of the thriver that is asking this question. But, you do not want to be in a situation where you have one major mechanical flaw that completely wipes out your business, your dreams, all the progress that you’ve been making. This can happen, it will happen. You need to make sure that this is included in your lease. That you’re covered for major mechanical. Boom.
How to effectively negotiate a white box lease. Listen if you have any other questions on that, email us at [email protected]. Now thrivers, if you have a friend of yours or someone you know that has a business or wants to start a business, wants to grow a business, we encourage you to share this podcast with them. The whole goal of thrive, is we want to mentor millions and we want to give people access to the world’s best business school. So thrive15.com, we offer thousands of training videos, proven templates, downloadables and exclusive access to in person workshops. The whole thing is only $19 a month. So share it with somebody and we’ll check you out on the next podcast. Boom. Thanks for listening to the excellent business coach and we’re out.
