S/O - Should *I* ask landlord to lower rent?

[UrbanSimplicity]

My situation is a little different from UberMamas, but we've been considering the same.

We pay $2500 for a 700' space centrally located in a super trendy, pricey neighborhood - we split it up into a 150' storefront and 500' living space. The storefront is legally zoned but we do not have the proper certificate of occupancy so basically our landlord did us a favor by turning his head. he actually advertized the space as live/work (to make more money i'm sure, so it was not just a 'favor' he did us. there are a lot of little places i the neighborhood like this.)

here's the thing: we signed a 5-year lease. first 2 years at $2500, then years 3,4,5 increase by $100 each year. well, we technically should have gone up to $2600 in june but he did not mention it, i think knowing that now is not a time anyone is raining rents.

So I wonder if it's even worth asking him. Even if he thought he'd lower it by $300, he probably star counting down from the $2600 we should be at.

two last things -

1. our store makes enough to pay our utility bills, the guy who runs it, and maybe $400 of our rent. The rest is paid a bit by my business, maybe $600 and my husband's shop (our main money maker) $1500-1700. But the store has literally made a bit more money each month we've been open, and has huge potential in a place w/ this much $ floating around.

2. there are tons - really 1,000s of unfinished condo apartments in the neighborhood. there's been about 5,000 new units in the past 2 years - does this mean rents overall will be lowered? way more supply than demand? they are not selling and word is they will be rented for the next few years. as of now they sit unoccupied.

[bobandjess99]

I'm sorry, I have no useful advice, but I'm just *mouth open* here.
We just sat down for a hard look at finances last night. Dh brings home $1600/month.
You pay $2500 in rent. *gulps*

[gentlemango]

This is tricker than the pp's question imho. Sounds like you like the place and intend to stay regardless. Also sounds like you're not in particular financial hardship right now, unlike the pp who was desperate and would probably have to move if they couldn't get a rent reduction.

I'm not saying you shouldn't ask. But it feels iffier to me than the other post.

[phatchristy]

I suppose you *could* ask if he would re-negotiate the lease, however legally unless you have some sort of clause that would allow you to get out of it he would be entitled to receive the agreed upon amount. So, I don't know what the benefit for him would be.

Being that you also have a retail space there I'm sure that has some advantages $$$ wise that a regular condo wouldn't have.

[UrbanSimplicity]

hi bob and jesse, I know it sounds ridiculous , in my hometown I could afford a mortgage on a gigantic house (not that i'd want that) but we are actually pretty broke and working on paying off debt. we make $$ but have to pay for tons of overhead to make that $$. so at the end of the day we maybe make $10/hr.

But that's beside the point. I guess my rational is that the market has dropped, there's tons of open spaces here, if he had to rent this place, i doubt he could get this amount right now. And we are friendly with him, good tenants who pay our rent on time (by the skin of our teeth) every month. But no, we're not quite at the point of saying we'd leave if it wasn't lowered.

[gentlemango]

But you signed a 5 year lease, so you can't leave even if you wanted to, right? I'm not sure what you'd tell him. It's not like you are able to take a lower rent somewhere else, cause you signed a long term lease.

From his perspective, he gives out 5yr leases so he has to ride the ups & downs of the market even more than you. 5 yrs ago he probably took a big hit offering leases that could only go up by $100 a year, when he saw rents around him increasing by probably $400-500/mo each year. You see what I mean? He takes a risk offering a 5yr lease, and you take a risk signing a 5yr lease, but you both accept the trade off which is stability.

I'm not sure what your rationale is for wanting a price decrease, since you actually can't very well go somewhere else for a lower rent. You signed on for a 5yr period at a fixed price. He signed onto that too. That went into his budget over the long term. Asking him to lower the price just out of the goodness of his heart, cause the market is going down around him, even though he is already absorbing that loss in the new leases he is offering to other people right now, isn't really fair to him. JMHO.

[UrbanSimplicity]

Originally Posted by gentlemango

But you signed a 5 year lease, so you can't leave even if you wanted to, right? I'm not sure what you'd tell him. It's not like you are able to take a lower rent somewhere else, cause you signed a long term lease.

From his perspective, he gives out 5yr leases so he has to ride the ups & downs of the market even more than you. 5 yrs ago he probably took a big hit offering leases that could only go up by $100 a year, when he saw rents around him increasing by probably $400-500/mo each year. You see what I mean? He takes a risk offering a 5yr lease, and you take a risk signing a 5yr lease, but you both accept the trade off which is stability.

I'm not sure what your rationale is for wanting a price decrease, since you actually can't very well go somewhere else for a lower rent. You signed on for a 5yr period at a fixed price. He signed onto that too. That went into his budget over the long term. Asking him to lower the price just out of the goodness of his heart, cause the market is going down around him, even though he is already absorbing that loss in the new leases he is offering to other people right now, isn't really fair to him. JMHO.

Sorry, I hope this can be read gently, but most of what you said is incorrect.

First off, I've had drinks and birthday parties with my landlord. We absolutely can leave before 5 years, simply by giving him ample notice to find new tenants. We were the ones who asked for the longer lease because we were investing time and sweat into the opening of our store.

Also, I'm not sure what market rents can increase $400-500 a year? That means in 2007 an apartment that was $2500 would be $5000 by 2012? I forget what the law is (and nyc is not known for it's renter-friendly laws) but i think a unit can only increase 6% each year unless major renovations/investment has been done.

I'm still on the fence. I want to do what is fair, and as I advised ubermama, the landlord can only say no if it is a hardship for them. On the other hand, if he knows darn well no one would take this place for more then $2200 it would be better for him to give that raye to us, then have us leave and go through the trouble of painting, advertising, maybe having the space open for a month or 2.

[SleeplessMommy]

If you can walk away from the lease with 6 months notice or less, and find another place at a lower price, it could very well make sense to ask for a lower rent. Or, ask if he has a lower rent place available elsewhere.

[JTA Mom]

Business is business.

I would look around for a comparable place, price it out and everything. If it comes out to be significantly cheaper to rent someplace else, you now have ammo AND the ability to leave.

Then I'd go to your landlord and talk to him. You can show him what you found and see if he'll lower it. If not, be prepared to walk. The only catch is you might not find someone to assume your lease, which could cost big $$ and make moving a moot point.

Being in business and renting is a risky business. Just because there's a long term contract doesn't mean it can't be broken by either side if it no longer makes financial sense.

Ami

[gentlemango]

Okay, I guess I'm not understanding what a lease binds you to, if you can give notice at any time. I've only rented month to month so I'm not real clear about leases. NY has very strict rent control, doesn't it? In many areas of the country the rent absolutely can rise with the market rate, we have friends in silicon valley who saw their rents rise $400/mo year over year during the boom years. That's what I mean about the landlord taking a hit when he agrees to give you a long term lease, cause in rent control cities he's taking a risk that the market rate will rise more than he's allowed to charge. That plus him giving you a break with the regulations and all, I can see how it's a sticky situation & why you are hesitating.

Otoh, if you're friends w/ him socially, and you are in financial hardship, and he can afford to, he'll probably want to help out a friend in need. That probably gives you a better chance of being able to come to him and ask for a decrease.

[Maluhia]

See I'm stuck in a 2 year lease much above current market value but I would have been happy, even gleeful, if rents went up and I got to stay at this rate. So you know what, I stay. I pay on time, and I know that I'm doing the right thing.

If you are not in financial crisis and unable to pay rent, then my vote is to abide by the contract you signed.

I think the $400 increases pp was talking about was BETWEEN different tenants, not to one tentant. That certainly happens in my high COL area.