Here is a very simple and easy way to write a rent reduction letter if you can answer the 3 questions below.
Tell them why you want a rent reduction. It can be very simple and brief. You don’t have to be a professional writer to explain why you are having a hard time. You can start like this, “We have been experiencing an operation loss for 3 months because of this difficult economy and would like to request a rent reduction.” If you can be more specific about numbers (e.g. you are losing $3,000 a month), it would be more effective. You can also state that you are willing to provide any financials if necessary.
2. How Much?
Tell them how much reduction you would like to have. One thing I have experienced as a commercial real estate agent is that they always offer you less reduction than what you ask for. Make sure you initially ask for a little more reduction than what you can actually afford. Be clear and straightforward about this and tell them you really need this much reduction. You may want to contact your local commercial real estate agents to compare your lease rate with the current market rate.
3. How Long?
The maximum you can ask for is of course until the expiration of your lease. One of my clients in Chino, CA used my tips and asked for the remainder (3 years) of the lease, and they were able to get one year rent reduction saving $31,200 ($2,600 per month). Obviously my client was very happy with the monthly saving they didn’t expect to have.
Even if you have to spend 2 or 3 hours preparing documents or looking up your business bank statements to write the letter, wouldn’t it be worth saving $2,000 or $3,000 a month? I know we are all busy and tired, but when it comes to saving not just a few dollars, but tens of thousands of dollars, you ought to ask yourself, “What am I doing?” Take out a pencil and paper, Now!
David H. Lee – Vice President
Coldwell Banker Commercial George Realty