In this video, you’re going to learn how to lower your rent if your business has been
impacted by Coronavirus. Our country is navigating unprecedented territory
at the moment. Cities are in lock-down. Businesses are being
forced to close their doors. But they’re still having to pay rent.
So, today we’re going to cover how to lower your rent if your business has been shut down
by coronavirus. Hi I’m Tyler Cauble.
I’m an Amazon best-selling author on leasing commercial real estate and I’ve helped small
businesses find and lease space across the United States and Canada.
Here are some tips on how to lower your rent now if your business has been forced to close.
First, remember that we’re all in this together. You’re not the only one worried about how
business will be impacted by the shutdowns. Your landlord is, too.
The worst case scenario for both you and your landlord is your business having to shut down
permanently. Not only will that leave you in a bad place,
but after we recover from this downturn, the landlord will still have to fill a vacant
space. With our current environment, it’s unlikely
that any tenants that could backfill your suite.
So, it’s in your and your landlord’s best interests to work together.
Second - Communicate Early, Communicate Frequently If you haven’t reached out to your landlord
to discuss how your business has been impacted, do so immediately.
Over the last week, we’ve been receiving phone calls and emails from tenants on properties
that we own and manage asking how we’re going to handle rent payments.
While the economic crisis may not be an issue for the majority of them, it’s certainly
better for us to have a plan in place just in case.
If you know that over the next couple of months you are going to have an issue paying any
of your expenses, notify your landlord far before it becomes an issue.
I would recommend a phone call or in-person meeting rather than emails, but send a follow
up email recapping your discussion. Take the issue head on and work through potential
scenarios with your landlord. Third - keep in mind that your Landlord is
a business owner, too. Your landlord is likely in the same position
you are. Many real estate owners are entrepreneurs
and investors, just like you. Missing one, two, or three mortgage payments
could trigger a foreclosure with their bank where they could lose everything they’ve
saved up for, so receiving no rent may not be an option.
While you may not be able to afford 100% of your monthly payments, anything is better
than nothing. So, if you’d like to lower your rent, here
are three potential scenarios you can take. 1. SUBLEASE A PORTION OF YOUR SPACE
A sublease is where you rent out a portion of your leased space.
So you could rent an office, desk, or even storage space in order to help cover your
bills for the time being. Not a bad way to network, either!
Of course, you’ll want to get the green light from your landlord first.
In my experience, landlords do not mind your subleasing the space, so long as the business
is similar to your use and the rent gets paid on time.
2. REQUEST TOTAL RENT ABATEMENT This scenario should be your last ditch effort
if nothing else has worked out. A landlord could potentially see this as a
big red flag for your business and think you may not be able to recover after this crisis
and pay them back. However, if you do have a good enough relationship
with your landlord, total rent abatement is certainly an option.
Taking this option will certainly require quite a bit of trust between you and your
landlord. In an abatement scenario, offer to tack those
abated months on to the backend of your lease. For example, if you’re requesting the next
three months of rent to be abated and you have a 60 month lease, offer the landlord
the option to extend it to 63 months. This way, the landlord will still get the
full term of the lease and you’ve lowered your rent in the short term.
3. DISCUSS A PARTIAL RENT ABATEMENT If your business is already being impacted
or it’s imminent, requesting a partial rent abatement for a set period of time could be
a good option for you. For example, instead of paying 100% of your
rent, request to pay 50%-75% of your rent for the next three months.
While asking for half off your rent at the moment is certainly optimistic, it couldn’t
hurt to ask and open the conversation. Remember - any rent concession at the moment
could help keep your business afloat. My recommendation here is to “give” a
bit, too, and not just “take.” Offer to pay the landlord the difference back
over a certain time period or have it added on to the backend of your lease.
A partial rent abatement is the most likely scenario in our current environment.
So there you have it - how to lower your rent if your business has been impacted by Coronavirus.
For a deeper dive into lease negotiations, you can find my book, Open for Business: The
Insider’s Guide to Leasing Commercial Real Estate on Amazon
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If you have any other questions, please leave a comment below and I’ll be sure to respond