How to Make Holiday Rent Payments
Easier on the Cash Flow
Dear Friend,
In my last update, I talked about the importance
of calculating percentage rent on entire 'holiday
term', rather than month by month... if you missed that update, you can read it here:
http://www.kioskexpert.com/combining-rent-081706.htm
***
I received the following comment from a leasing
representative on my list:
'... I believe most developers charge holiday rent
per month but calculate breakpoint for the holiday
term...'
- C.R. / Colorado
C.R. is correct in that MANY mall developers
calculate holiday PERCENTAGE rent based on the
ENTIRE 'holiday term'... November and December.
A 'developer' refers to a company that often times
owns, manages, and/or develops many malls.
Some developers do NOT... as a matter of standard
practice... calculate holiday percentage rent based
entire term. Which is why you need to be AWARE of the issue,
and ADDRESS it, if necessary!
Again, if you missed that update, you can read it here:
http://www.kioskexpert.com/combining-rent-081706.htm
***
C.R.'s email brought to light ANOTHER important
point for discussion...
... which is that even the developers that calculate
percentage rent based on the entire holiday term... will often times allow you to SPLIT your rent into
multiple PAYMENTS.
***
Probably the most common way to split the holiday
rent payments is MONTH by MONTH.
For example, if your base holiday rent for November
and December is $10,000... you might be asked to pay $5000 at the beginning
of November and $5000 at the beginning of December.
***
Ten years ago, when I started my first cart, and
start-up cash was a little TIGHT. I had about HALF the cash needed to get
started in my savings account.
My brother agreed to lend me some of the extra
cash out of his 401K plan... and I signed up for, and got my first credit
card (with a whopping $1000 credit limit!)
But I was still on the edge. And wasn't sure I
had QUITE enough.
***
I talked with my leasing rep at the mall about
my situation... and she arranged for me to split my $10,000
holiday base rent into THREE payments:
$2500, or 1/4th due November 1... $2500, or 1/4th
due November 15... and $5000, or 1/2 due at the
beginning of December.
The advantage was in being able to use CASH FLOW
from sales... to contribute to the 2nd and 3rd payments.
And needing less to get started up-front!
***
In my experience, the leasing reps are OFTEN
willing to be flexible when scheduling your holiday
rent payments. Sometimes 1/2 and 1/2... sometimes 1/3, 1/3, 1/3...
other times 1/4, 1/4, 1/2...
I have heard of all SORTS of flexible ways it has
been done.
SOME malls will be more flexible than others.
Of course, it's up to YOU to ask!
Splitting your holiday rent into multiple payments CAN
BE much easier on the cash flow... and make it easier to
get STARTED up-front!
Brady Flower
The Kiosk Expert
