Discount for early payment
A tenant offered to pay 6 months of a year-long lease up front for a discount. Curious to hear if anybody offers something similar. My first thought was no, he’s contractually obligated to pay the full amount, but with uncertainty surrounding Covid, I think there’s some value in having the cash in hand.
[{"id": "fzoyqvl", "text": "If you need liquidity, then not a bad deal. If not, then no.", "replies": [], "depth": 1}, {"id": "fzozi5k", "text": "You may want to call it an early renewal and lock in a longer term at a slightly lower rate. If a year goes by and the world falls to shit, then you will renew at a much lower rate, so locking it in now may be better for everyone.", "replies": [{"id": "fzp56c7", "text": "Yes, absolutely. A blend and extend kind of situation if possible", "replies": [], "depth": 2}], "depth": 1}, {"id": "fzozty0", "text": "I would not give a discount, but I would extend the same rent for a year or whatever to make up for it.", "replies": [], "depth": 1}, {"id": "fzp3pnr", "text": "Watch that doesn\u2019t put you offside a mortgage. It would be an issue under many customary commercial mortgages (Canada).", "replies": [], "depth": 1}, {"id": "fzp8fwx", "text": "I'd do it.", "replies": [], "depth": 1}, {"id": "fzp8prt", "text": "I can just see my accountant getting upset if I pulled rent forward from the next year into this one. You\u2019ll have a bigger than expected tax liability.", "replies": [], "depth": 1}, {"id": "fzp94ag", "text": "Is there a loan on the property? Check the loan docs because some lenders don\u2019t allow you to collect more than one month\u2019s prepaid rent", "replies": [{"id": "fzpax66", "text": "Correct. Not allowed. Source: banker", "replies": [{"id": "fzqi3fe", "text": "Prior written permission absolves most sins...\n\nWhat they will make you do with the proceeds however might damper your desire to take the deal/discount being offered.", "replies": [{"id": "fzqzmig", "text": "Yea I\u2019d want to hold it in a lender controlled reserve account.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fzpa2qz", "text": "If the discount is minor it would be worth it.", "replies": [], "depth": 1}, {"id": "fzq27se", "text": "I would not offer a discount.", "replies": [], "depth": 1}, {"id": "fzrdpnn", "text": "I am absolutely not entertaining this idea with any of my tenants. 1- because I need the full cash flow, if I give one a discount, they'll all want it. 2- You are contractually obligated to pay your rent. You don't get a cookie for doing what you're legally required to do. 3- I have nothing to gain here. If the tenant is close to BK, they can't afford to pay this much up front, and BK is the only way I'm not getting my judgement if they do stop paying. Most of my leases are backed by personal guarantees.", "replies": [], "depth": 1}]