Another Way a Change of Tenant Can Make You Money
I was saying yesterday that one of my properties became more valuable when I changed tenant. It didn’t become more valuable in a way that a valuer would recognize. The new tenant wouldn’t affect the official value. But the property became more valuable to me, because my life suddenly got easier and more enjoyable. Even though it’s hard to quantify, don’t underestimate how important that is.
When I met with the new tenant, I saw another real benefit straight away, and this will ultimately make me money.
You see, this is the property with a lot of extra land, which I want to break off and sell.
When I first mentioned subdivision to the old (angry) tenant, he essentially said: “I hope you don’t plan to subdivide the land. You can’t. I’ve had the lease checked, and my lawyers have confirmed that you can’t do it. My lease covers the entire block, so you can’t subdivide it, and if you start taking any action towards subdivision, I’ll fight you.”
Now, we checked this clause with our lawyers when we purchased the property. They told us that the subdivision clause was clearly intended to allow subdivision, but was badly worded and ambiguous. Not great, but quite different to the tenant’s stance on the issue.
Anyway, with the new tenant, when I mentioned subdivision, her response was very different. “Please!” she said, “I’m not using any of that land, but it costs me thousands of dollars on mowing and general maintenance. The sooner you can subdivide it, the better. I only want to manage the small piece of land my that the building is on.”
I don’t know exactly how much, or exactly when, but that difference in attitudes will make me money in the future - no doubt. Again, it doesn’t show up in an official valuation, but it’s worth a lot to me.