When it comes to negotiating a winning billboard ground lease with the property owner, there are a number of different styles and strategies. But probably the most effective is the concept of “inclusive” negotiation. In this Billboard Mastery podcast we’re going to explore what “inclusive” negotiating is all about and why it is probably your best shot at getting great deals done.
Episode 95: How To Be Inclusive In Negotiating With The Property Owner Transcript
There are many different ways to negotiate a billboard ground lease. I've tried pretty much all of them in my career, but the one that I think works the most effective in most cases is called being inclusive, inclusive negotiation. This is Frank Rolfe, the Billboard Mastery Podcast. We're gonna explore inclusive negotiation, how it works, how you can become a master at it, and why it's so darned effective.
Now you've got lots of different options in negotiation. You have one that's called win-lose. In win-lose negotiation, one of the two parties always feels jipped, unhappy, taken advantage of. And a win-lose negotiation to happen you need to have the weak party. A perfect example of win-lose negotiation is you go to the car dealer on the last day of the month at four o'clock, they close at five o'clock and you get a salesman who has to sell one more car to make his quota for the month or he gets fired.
He's in a weak position, he doesn't wanna lose his job. You walk in the door and he thinks, hallelujah, I have a shot to actually make my quota. And that guy will push harder than any other salesman to get that price low because he's weak. You as the buyer are strong because you hold his fate as far as maintaining his job. And that's classic win-lose negotiation. The problem however, is that most times the farmer or the property owner that has the land where you want to build the billboard or where the billboard already exists, they're not weak. They typically are asset rich. They have very little debt. They don't have big living expense costs and so they don't need you at all. And you're not really offering enough money to change their world anyway. What are you offering that person? 300 a month, 500 a month?
That's not gonna change their lifestyle. That's not gonna stave off the bank. That's not gonna do a darn thing. So win-lose negotiation typically does not work with our kinds of property owners. So that then brings you to win-win negotiation. Win-win is where both parties feel they got a fair deal at the end, and that's how it typically works because you can't push rich people around like win-lose. But there's a subset of win-win, which is called inclusion. Now, when inclusion means is you really let the the property owner in more closely to the inner workings of your plan than you typically would. So to work inclusively, you would actually basically show your numbers to the property owner and say, here's what I have to work with, so help me figure out how to make the deal happen. You might say, this sign will rent for about $500 a month per side out here in this country, little road.
And so there's a thousand a month of revenue. And then I have to take out my cost of production and my electricity and my insurance and my repair and maintenance and here's what it would be. And so the most I can pay you is a percent that would make it compelling for me to build the sign is this much. What do you think? And see what they say. Sometimes they'll say, yeah, that looks fair to me. Or they might say, well, I think I should get a little bit more. 'cause I think instead of 500 a month, you can get 600. But it helps to put them in your position to help make the decision. And suddenly they're not on their team. It's no longer a contest, a football contest one team and the other team. Now we're all on one team because you're showing them with transparency how it works in your opinion, and you're asking for their advice.
Do you think this would work? What do you think? Can you see where I'm coming from? Can you see how this is? And a lot of people respond very favorably to that. A lot of property owners like when you include them into your thoughts. Also don't forget, and again, based on your age, but most property owners are kind of older. You're typically probably younger. So often they feel like they're helping to educate the next generation. They're able to help people out. We call that power bonding. It's kind of a transference where older people like to help out younger people because they view them as how they were in years gone by. So inclusion also helps them to become more active. But when you're looking at negotiating with a property owner of all the different styles of negotiation that exist, I think inclusion is typically your best path.
Some would say, oh no, don't be so transparent. Don't tell the other side of the equation what you want. Well, why not? Because if you're not gonna get the deal, it didn't matter anyway. And I found that historically your chances of getting it are much higher when you do bring the other party in and show them what in the world's going on and how it all fits together. I've had people who asked for ridiculous amounts of ground rent. Who would I then said, look, show me how this is compelling to me. I've gotta pay to build the thing. I've gotta have debt on it. Why would I even do it based on these circumstances? And I've had people then say, you know what? You're right. I wasn't thinking about it clearly. And now that I see your position, I agree with you. It's not compelling.
I'll have to go ahead and give you more money. I have found over the years that people are mostly good natured. Most people like to help others. Sure, there are some real bad ones out there. And I've run across all of them. I remember one guy one time trying to get him to sign a ground lease, said to me, oh, I'm sorry, I don't make commitments to anyone including my family. Boy, what a great spouse or father that guy would've been. But most people aren't like that. Most people are pretty good natured and friendly, and they like to help. And when you bring them in inclusively, often it allows their best qualities to come out. The bottom line to it is if you're trying to get a deal done with a property owner, just try win-win inclusive negotiation. Just give it a shot and see what happens. I think you'll find your results will be very good indeed. This is Frank Rolfe, the Billboard Mastery Podcast. Hope you enjoyed this. Talk to you again soon.