HOW TO NEGOTIATE LEASES

This chapter is going to be primarily focused on your first meeting with someone that you are working with in negotiation. I’ll present this to you in a timeline format: everything you need to do prior to meeting that person, everything you need to do as you meet that person, and everything you need to know and keep in mind during the negotiation process. 

I am writing this for you as I’m negotiating another deal myself. I’m in Manhattan right now working out the terms on a 28 million dollar real estate contract. I’m sitting at a table with a gentleman I have never met before, and I’m going to use the exact experience I’m going through right now to teach and demonstrate how to negotiate. 

Section one: Preparing for the negotiation meeting. 

Do you research. 

Your first step is to prepare and do your research. You need to know who you are meeting with, where are they from, what do they do, when is their birthday, do they have kids, do they have husbands/wives, etc. Get all the like information about them that you could ever need in order to have a real conversation with them, that way you're not flying in blind and just having small talk. You want to connect deeper with the person/people you are negotiating with. 

Show up early

The second step in preparation is to always show up early. That means 15 minutes 20 minutes before your meeting. The last thing you want is to be flustered because of traffic or any other external reasons. Protect yourself against any awkward/emotional state of mind by avoiding variables like being late. Being early sets a great first impression and shows respect.

Dress the part

Three: dress the part. Dress at or above expectations. I live in Texas where a lot of people are fairly casual and in meetings, they're dressed casually. Texas casual means jeans and boots. In other bigger cities people wear suits and ties. For my negation today, I am in New York, so I prepared to dress the part by packing a suit. I believe you cannot be overdressed, but you can definitely be underdressed. Don’t end up in that category – make sure you dress the part! You will know (based on your prior research about this person before meeting them) where the person you're negotiating with tends to line up on attire. Make sure that you wear what your research has told you is culturally appropriate for when you meet with them. 

Get in the mindset

Four: when you arrive at your meeting early, take a moment to pause, reflect and focus on your mindset.Make sure that you feel prepared, confident, that you understand that there's no more preparation. It’s gotime! This meeting is happening right now so your mindset is everything. It’s like taking an exam you cram prior but, when you're stressed for that exam, the moment the exam starts you're in the wrong emotional state to perform well. You need to get into a place where you're performing well emotionally, which means that 15 minutes before the meeting starts you need to really focus on your mindset. Make sure that you'recalm and collected, optimistic, and ready for that meeting. This allows you to get into a flow state.

A flow state is where you can react freely to someone, but you have no expectations. You already know what you want to talk to them about (you already have that prepared), you're not running circles in your brain about the things that you think you're going to say and wondering how it's going to go. Wipe all that stuff away and clear your mind. Get into that flow state so that way you can meet that person authentically, respond to them authentically, and do things one step at a time without getting ahead of yourself. A lot of people who screw up negotiations when they're new talk way too fast. They say way too much stuff because they're nervous. They try too hard, they oversell all these different things, and a lot of this can be avoided by getting into that flow state.

Section Two: During the Meeting

We're going to cover everything from the handshake you exchange upon introducing yourself to the handshake you exchange at the conclusion of the meeting. This will include everything you need to know once you're at the table like having coffee or having lunch. 

First impressions are critical. You want to make sure that you set a good positive first impression. We’ve tried to prepare you for that by researching the person you're negotiating with, making sure you dress the part, making sure that you're in the right mindset, you're in a flow state so you can actually just meet someone and react to them as they are. 

I recommend you read a book called Enchantment by Guy Kawasaki. Guy is an an ex-apple employee, and he talks about the four aspects of a great first impression. He includes tips like how to smile where your crow's feet show, because that's actually how you show your smile is real on your face instead of a fake smile (teeth smile.) His book has a lot of additional tips that will help you make a lasting memorable first impression. 

Your body language is something you need to be aware of during your meeting. During that first meet your body language cannot be too rigid. People are generally forgiving of someone being slightly nervous, but it’s still important to take the time to make your body language as welcoming as possible based on the person you are meeting with. Not everybody's an extrovert so even if you are a little bit tight in the shoulders when you meet someone for the first time some people can take that as a positive sign. I know people in Human Resources are trained to look past people's nervousness during job interviews because “nervous” just means you care and if you dock points against someone for being nervous in an interview you'd flunk all of your applicants except for sociopaths and ego maniacs. Being a little nervous is okay, just don't be “too” tight. Get out of your head if you feel super nervous. Try to focus on your feet. You’ll find this is a real useful trick. This helps you stay mindful of your body and your body language and can help you relax.

Handshakes

When you meet someone, handshakes are important. You should also consider that culturally, best practices can vary. I like to turn my palm slightly up. Not so much as a car salesman stereotypically but slightly “open.”Create a firm handshake by not closing your hands until the meat of the hands come together (where the base of the thumb meets the palm.) Generally a handshake should not exceed four seconds. Typically they’re much faster but there are some persons who like to make small talk mid handshake, that is normal as well. Culturally handshakes should be unisex in the United States. Do not default to a dainty handshake if it’s a co-ed handshake. Include eye contact, a slight lean forward, a nod & smile as you greet a person, and you have a solid first impression. 

Relatability and common ground

People look for mutual fits in their interactions. They like others they can relate to and whom they can find common ground. People tend to make those common-ground fits work as long as it’s a ‘natural’ interaction. If you try to force something you're going to make conversation awkward and ultimately make it impossible for that other person to connect with you. Any time that two people come in to negotiate you should expect that both persons are ‘investing’ their time at this meeting. Both persons want a deal done. They're trying to find a reason to do business with you because they see a potential in getting what they want with you or from you.Don’t try too hard. Remember, the person you are meeting with is there for a reason. Relax and let the conversation flow naturally. 

Listen more than you speak

It’s very important to listen more than you speak. This advice is common, and there is a reason for that.Gathering information is probably one of the most important parts of the negotiation. You want to uncover people's pain points, you want to understand their ambitions, you want to let them talk about what they want to talk about. Try to understand the way that their mind likes to wander and what subjects matter to them. Anything that has happened to them recently can influence mood, bias, and ultimately decision making in the conversation. Find out what style of humor they think is funny. You will have to listen more than you speak. 

Always let the other person talk first. Let them open up, be interested in them and what they have to say. This is much like the second mover advantage in chess or blackjack. Ask open-ended questions. Avoid yes-no questions allow them to tell you more in a format that they want to tell you their story. This gets them to walk themselves out into the open instead of trying to pry someone open. You’re going to be in such a more powerful position 15 minutes into that negotiation when you listen more than you talk. Stop focusing on what you have prepared.

You’ve practiced what you wanted to say for days and days before this negotiation. You've practiced the bullet points, the benefits, everything you want to say. You know it all and it's been racing through the back of your mind because you're eager to get this deal done and confident you have the winning pitch. I have got to say these magic words at the right time.” No, you don’t. Yes, but no.

After you’ve learned everything that you need to say to someone that you want to negotiate with, it's going to be important to speak appropriately when the opportunity presents itself. You don't want to just try to go and give a speech at the first opportunity you have to speak.

Example:

Prospect: “tell me more about you “

You: “so yeah, the great thing about this deal is”

No, he said tell me more about you not more about your deal.

If you're constantly thinking about what you want to deliver to someone you're not going to be able toauthentically respond to the conversation because you're constantly going to try to segue into your pitch. You need to abandon your pitch when you're getting to know someone. Your pitch does not matter. It should be the last thing on your brain. 

You will eventually get a chance to start saying some of those key tidbits if you lay the proper groundwork. A script never goes 100 % according to ‘script.’ You don't line up a person perfectly to swing the bat like it's t-ball. You have to adjust your script accordingly. Remember, though, the moral of the story and the conversation will flow to where you can start to deliver pieces of it at a time where the person is ready to hear you. You've got to segue into getting that person ready for what you have to offer, ready for your proposal. While they're talking/while you're listening you want to use mirroring techniques and potentially other NLP techniques. Here are a couple.

Mirroring is when you mirror the actions of the other person. If someone leans in, you lean in. If someoneholds their hands a certain way (folded, pyramid, thumbs together, rubbing two fingers together, etc) you hold your hands that way. If someone leans back, you lean back. Crosses their legs, arms and/or leans to the left in their chair, you do the same. You mirror their body language, so you are creating subtle similarities with them. Mirroring someone will influence them to think that you're more like them. 

This is effective because people are tribal, and humans are social creatures. They have been in tribes ever since we've had writing to track early human behavior. Don’t mimic every single little thing that they do in a way that inspires a “why are you copying me bro” response, but pick some the little things. They will start to mimic back as a sign that it's working. They won't even notice it. You’ll know when the person is connectingwith you because when you lean in, they'll lean in too. Using this, you can start taking lead on these things just to do what's called a compliance test. You can test to see if they're “in” this conversation which is a cue that their buying temperature is higher, that their interest level is higher, you have their focus, have their attention.

They say that blinking faster is a sign of liking. That’s also a very subtle way to tell someone you like them, just to blink more. When you're a conversation with another party I don't ever try to use that one though it might happen naturally. (Especially once you’re accustomed to subtle forms of influence, this kind of behavior just starts to flow.) I also like copycatting phrases. If someone likes to use the word bud or pal, I will try to use the word bud / pal instead of friend /champ / sport / etc. Cultural syntax and phrases and stuff like that are another way to be tribal. You’re looking for more similarities and you're trying to achieve likability and respect first before you achieve their interest.  

Listening more and carefully avoiding saying things to make yourself look dumb, has made the person enjoy their experience with you. They are much more likely to like you now and they respect you because you haven't done anything cliche or terrible. We’ve all had disaster dates. Negotiations can go the same way there is a silent appreciation for the fact that you're not being a weirdo during the negotiation. At the point that you've earned all of these unspoken points with this person then you can start to generate interest in your pitch or your product or your proposal.

At this point what you can do is you can start to line them up for your pitch your or your points by feeding back to them things that they've said earlier on in the conversation (with your own unique phrasing) that starts to point in your direction. If someone has a pain point like they're having a hard time with non-paying tenants and evictions for example or their cost of turning over new tenants is too high, that's something that I would play with.

In this recent negotiation was able to find that his one of his greatest expenses as a landlord was the cost of replacing a tenant after one move out so I started talking about rental arbitrage (which is what I do) and in that conversation I made sure to stop at the part where we sign two or three year-long leases, and we always renew those leases as long as everything is going normal. As part of our business model, I try to pitch landlords on the fact that we can lease 100 doors of a building within months and then we keep the building essentially forever as long as our model works out in the neighborhood and of course we do our due diligence to make sure the model's going to work. before we say yes to an investor on a building. So this is kind of what a deal would look like when we pitch a landlord like that. Instead of saying “if I could tell you this would you be interested” like a salesperson I basically did what a recruiter would do. You call the person you want to recruit and say “hey, our company's looking for a software engineer. I know that you're one of the best software engineers I’ve ever met, do you know anybody who's on the market for really high paying cutting-edge software engineer job? I imagine you know tons of people.” While you’re actually hoping that guy says “well, yeah, me! I want that job!” I did the same thing with this landlord. While feeding back his problem his pain point I phrased it like “I have a solution to that pain point, and so when I pitch other landlords what we do is…” He like basically ran straight into my proposal without knowing that I was laying the proposal out in front of him. I slightly opened the door for him to say “ tell me more. how do you choose your buildings?”Now I start telling them about my market my market research strategy for my rental arbitrage business. I was able to start layering on all the benefits and that leads me to like one of my next points, which is to never forget that there needs to be something in it for the person you're negotiating with. 

You need to find synergies where what you do and what they do can get better together and it always has tohave an advantage for them. The moment you find out what's in it for them do not forget it and don't let them forget it either. You’ll be constantly doing what's called embedding, where you weave in the value for them as you're telling a story. That is not focused on the value you just embedded. Continually reference value for them in passing as you're telling your greater story so that way it's not inherently obvious that you're trying to give them a reminder that what you're pitching them is valuable. Leave breadcrumbs of value and reminders that there’s synergy on the way through your presentation because a lot of times the things that we explain, they're not simple. We need to be able to communicate the complex details so that the person knows what they're getting themselves into, meanwhile you have to keep them on the line so you have to keep feeding them.

As they actively listen to you you’ve got to give them treats along the way. With that, there's the caveat, you've got to keep it simple. That means your terminology, inside lingo, stuff like that, you cannot go off the deep end and nerd jack the conversation. When you say stuff that they don't understand a lot of times they’llnod along and go “uh-huh” because they don't want to appear out of touch but if they don’t understand inner jargon, you're going to lose them because there's key facts of the deal that you could have explained at 4th grade level but you're trying to explain it like he's an mit student. That makes you feel smart, but it loses you the deal. 

Keep things in layman's terms as much as possible unless you're dealing with a subject matter expert who really enjoys using acronyms and elitist lingo. That will become hyper apparent in the conversation because they'll be the ones trying to push the envelope on cerebral conversation. You must know this now and remember for the rest of time the secret to sales and negotiations. 

The person that you're negotiating with, their decisions are going to be emotional and they're going to justify their choice with logic after the fact. In order for someone to choose to do business with you they have to have the feeling that they should. Once they get a feeling that they want to do business with you, a feeling to say “yes,” They are going to justify their yes with the logic that you've given them along the way. The logic itself is such a small piece of that greater pie. You see, the brain has two layers of activity. You’ve got the outer layer where it's actively processing things like ‘what's two times two’ but the inner neural network where serotonin, dopamine, oxytocin and other neurotransmitters are firing, it's all chemical, hormonal, primal. You cannot control that. You cannot make sense of that on the fly. So a welling up of the feeling “ this isn't good, I don’t like this, I’ve got a bad feeling about this” OR a feeling of “wow this is really popping off, this is really cool” (like a powder keg romance but in a business deal,) that stuff going to influence the decision. A person’s decisions on what they want to talk about where they want to go with the deal if they want to do the deal that upper layer is highly dependent on the emotional state that you put the person you're negotiating with. Finally, you're at the end of the deal now, you've got your pitch down, you've put it on the table, you've gone back and forth with some questions, you've mulled over cool ideas, and you’ve said something like “we could actually even do this blah blah blah.”

At this point Don’t be outcome dependent. Every negotiation is going to be unique because you're talking to a unique person every single time, so when you get through this negotiation session, some people just feel the need to spend a couple days on it. In this case they’re not going to say yes or no at the table. There are going to be people who want to shake hands and make a contractual agreement on a handshake and that'scompletely the opposite end of the spectrum. Other people want to draft up a prospectus, somedocumentation, and sign some things. Everybody is different. If you're depending on a very specific outcome, for them to say something in return like “yes, I’ll take the pen and sign this document right now.”

If you're outcome dependent you're going to lose 80% of your deals or your negotiations because nothing ever fits that way. The moment that someone disappoints you by saying no to your offering when you wanted them to say yes and you don't adapt because you get the feel-bads, you will then lose the deal because you made it yes-no in that moment and you stopped working “with” the person you were prospecting. This outlook is like a hit/miss mentality (baseball) but what you should be looking at it like a heat map. Finding out where are they on this deal compared to where I want to get them to. During that negotiation, with your presentation, you're trying to drop them as close to your deal and your terms as possible. If they end up somewhere else on the table by the end of meet #1 and you know you are a few terms away from what you find most ideal you then spend kore time on the back end. The next week(s) wrapping it up and providing solutions/perspective to nudge them closer and closer to the deal you want. If you cannot get the deal done 100% to the terms that you want that's okay. If you can get 95 or 90 percent of your ideal deal that is a huge win. You got them to take 90 percent of your deal and think that it’s a good deal for them.  You should expect the deal to be done later, you should always expect that you're going to leave your first meeting withsomeone at the negotiation table halfway but optimistically halfway. You want to be in a good direction and you want to have good moment and you want that other person to enjoy the journey of negotiating more than anything else because you want that person to pick up your phone call later. You want that person to meet with you again to talk about extra terms. You want that person to give you extra business if they're not the right fit for what you do. You want them to be like “man, this guy/gal, he knows what they’re doing and I really like him/her. We had coffee, I think you should meet with them, I’ll I’ll endorse this person.” You can meet with this total stranger and he'll give you referrals. This is how you negotiate get people to enjoy spending time around you and, voila, all the doors start to open. A lot of people say no to the first round of negotiations because they know that there's a better deal for them on the other side. 

Give yourself some wiggle room initially for you to like make concessions in your offering. This is one of the biggest parts of negotiating deals. People like to know that they got a deal, which means they need to ask you to do something that you don't usually do. You have to leave room to make those ‘judgment calls’ even if that's secretly the deal you wanted. At the end of the day you still need to set it up so that your deal two or three steps removed from your first round. This stuff is powerful, its how I’ve made my millions of dollars negotiating with people the way that they want to be talked to.