Podcast 89: How to negotiate rent and find balance

Today we’re talking all about how to negotiate rent, sublease, and find more balance in your life

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What you’ll discover in this private practice podcast:

3:19 How to have a conversation about subleasing a space

5:04 How to pay for school and pay down debt

9:45 Models for working to negotiate with a landlord

14:49 How to save on space to make more money

21:48 How to keep moving up

Joseph R. Sanok, MA, LLP, LPC, NCC

Joe Sanok Private Practice ConsultantJoe Sanok is an ambitious results expert. He is a private practice business consultant and counselor that helps small businesses and counselors in private practice to increase revenue and have more fun! He helps owners with website design, vision, growth, and using their time to create income through being a private practice consultant.

Joe was frustrated with his lack of business and marketing skills when he left graduate school. He loved helping people through counseling, but felt that often people couldn’t find him. Over the past few years he has grown his skills, income, and ability to lead others, while still maintaining an active private practice in Traverse City, MI.

To link to Joe’s Google+ .

Here is the Transcription of This Podcast

How to negotiate rent and find balance

This is the Practice of the Practice Podcast with Joe Sanok, Session 89. I am so glad you’re with me. I am Joe Sanok, your host, and what an awesome week it’s been. I’m going to tell you all about this week. It’s been just a fabulous week. This week, we’re going to be talking about subletting, we’re going to be talking about negotiating with a renter – no, no, no, not a renter. They are called landlords. That’s the word. We’re going to be talking about that. We’re going to be talking about finding balance in your life and how all of those intertwine with one another. And also, we get to hear the voice of one of our listeners that left a question.But before we get to all of that, I want to really thank Brighter Vision for being a sponsor this week. Brighter Vision makes beautiful websites. They are one of – no, not one of. They’re the world-wide leader in therapist website design. Just beautiful websites. When you look at their websites compared to other websites creation tools like therapy sites or any ones that you pay by the month, they don’t compare. They do so much backend research, they have done over 200 therapist websites, they’re all mobile-friendly, which for Google, is super important. Google is actually dinging people that don’t have responsive websites.

Actually, posted on my Facebook page, my personal page, just how Google was dinging people, and so many therapists were like, “What does it even mean to have a responsive website?” So basically, responsive website just means that someone has a good user experience, whether they’re on an iPhone, whether they are on a Droid or an iPad or a tablet or a computer or a gigantic computer screen that your website changes sizes based on the device that is being used.

So all of Brighter Vision’s websites do that. For 59 bucks a month, you get this professional, amazing, cutting-edge website, and it’s just amazing. It’s super cool. They actually have a promotion code where you get your first month free. Only 30 people get that, and it’s promotion code Joe. So if you just go to brightervision.com/joe, it’s just going to be awesome. So just talk to them even if you aren’t sure if they’re a good fit. They’re super helpful, and Perry was actually on the podcast a couple of months ago giving a bunch of website tips. So you have all of that in the show notes. I’ll link to that.

So check them out, and this week, we have a listener question. Seida called in and has an awesome question. So let’s listen to that question, and then we’ll springboard from there.

How to have a conversation about subleasing a space

Seida: Hi, Joe, it’s Seida from Illinois. I am a pre-licensed therapist. I’m going to sit for the LCSW exam in September, and then I’m looking to launch my private practice on a part-time basis closer to December. I was wondering if you could speak to the logistics of subletting or renting space from a clinician. My questions are, how do you have the conversation around subletting or renting space from a clinician initially, and how do you negotiate the times and the fees? What if the clinician rejects your offer? How should you frame your offer? And then finally, what response should you give to clients who say, “I thought I was coming to ABC Counseling? Why are we meeting at XYZ Counseling?” If you could speak to those questions, that will be great. Thank you.

Joe Sanok: Well, Seida, first, let me say congratulations on sitting for your exam and wanting to start a private practice, so fresh out of grad school. That’s just so stinking awesome. I think that’s just really smart that you’re taking the time right now to think through what you can do to save money, and I think that subletting idea, that’s why for me, it’s such an important idea, is let me just tell you a little bit about my story.

How to pay for school and pay down debt

So my wife and I got married in 2004, and she brought in A substantial debt into our marriage, and I brought in grad school debt but that’s about it. And not that that wasn’t substantial, but together combined, we had I think probably $80,000 in debt, and I had a traditional, non-profit job in 2004, drove an hour and 15 minutes each way to go see clients, worked a bunch of usually four days a week at 10 or 11 hours each day and then often had Fridays off because I was doing so much driving for the job.

But that first year, we paid for my wife’s schooling, which at that time at Northern Michigan University was about $10,000. We paid off 10 grand in debt, and we lived off of 10 grand. I mean, the place we lived, we lived in these A-frame apartments, which to call them an apartment is very silly. My wife could touch one wall, I could touch the other wall, and I could put my shoulder on her hand, and picture a roof that goes all the way to the ground.

So on the first level, if you just walked probably maybe five steps, you’re in the “living room, then there was the twirly staircase that went up upstairs”, then you had about five steps of kitchen with literally 12 inches by probably 12 inches of counter space, and we didn’t even have our microwave there. We had it on a shelf that we had because we didn’t want to use all of our counter space for a microwave. And then you took another probably five steps, and there was a bathroom, and I had to shower sideways because the roof came down and probably someone taller than 5’ 9” could shower without showering sideways, and then the windows upstairs where our bed was, the width of the upstairs was the width of a queen-size bed. We couldn’t have box-spring because it wouldn’t fit in there, and that was on the floor.

So on the floor was, we slept just on the floor, and the window up there was swollen open. And so it couldn’t shut, like it just wouldn’t shut, and so mind you, this is Marquette, Michigan, which is one of the most northern towns in one of the most northern states in North America. And so the blustery winters, our window was open. So we had to sleep with our winter hats on, we had our winter camping sleeping bags, which did go down to -15 degrees, but still, come one, is that how you want to live your life? But we did all this because right away, we were like, “We have got to pay down this debt. It is not going to help us be successful.”

And we then moved into a place that was $25 more per month, and it was a little bit larger, and then when we moved back to Kalamazoo and I took on a larger paying job, we still lived in a really little apartment, a little one-bedroom. We then moved into one floor of a house that I still remember, the heat cost us $500 the first month, which was not our budget, but it was such an old house and it was one of those like octopus-type furnaces.

We then moved back to Traverse City in 2009. We had been paying down most of our debt. We lived in my in-law’s basement while I was launching my private practice and started subletting for 20% of what brought in. And then in – I want to say 2010 or 2011 that we became completely debt-free.

And so for me, this question has a lot of not just baggage – not a baggage in a bad way, but just like memories of man, like we busted our tails from 2004 until like 2010, I think, it was we paid it off, to pay off like 80 grand in student debt, and that was like not making the money I’m making now. That was working like $30,000 a year jobs. That was having friends over way more than going out to eat and cooking together and playing games together, and it was pre-kids, yes, but holy cow! Like we busted it out. And so now, we can live a different type of life because we took that time to really invest in our future in the sense that we don’t have this debt hanging around our heads.

So when you ask this question about how do you sublet? I get so excited because it means that you don’t want to just take on business debt. You don’t want to just take on all this debt to launch a private practice, unlike a whim or on a guess that it’s going to work, but you want to be able to kind of like pay as you go and bootstrap it a little bit. And there is something to be said for investing in your future, but holy cow! How exciting.

So let me answer your question. It goes just like five minutes of me telling you stories about being that typical, poor, young married couple, but it’s part of my story, and I think it’s also a part of my success.

So how do you do it? Well, there’s a few different models, and it’s really different based on your region, your geography, like what people are doing in your town, but with these different approaches, you’re bound to have one of them that works.

Models for working to negotiate with a landlord

So one model is to approach a private practice owner and ask them if they are willing to sublet on days that people aren’t using their office, and I’ll kind of take you through that. That’s one model. Another model is to work directly with a landlord as to having a different payment model or payment schedule, and the other one is, I think, probably like a traditional renting model, which when you’re first starting out, I wouldn’t recommend, but I have a whole blog about what a triple net lease is. Let me write that down so that I can put it in the show notes.

So a triple net lease, knowing what that is, how do you kind of negotiate your rent, so triple net lease. I don’t want to forget that so that you get that in the show notes. Those are going to be practiceofthepractice.com/session89.

So let’s talk about kind of those two main models, and then within each of those models, there’s different structures. So subleasing from a private practice owner. So this is someone, they own a private practice, they may be a solo practice, they may be a group practice. Usually, you’re going to have more success with someone who has a pretty small practice already.

And so it’s just them or maybe it’s them and somebody else, but let’s think through when a private practice office can be used. So there are people that they want to be seen at 7:00 a.m. before work all the way up through – I wouldn’t personally advise seeing people maybe having your last session be at 8:00 p.m. so that you’re done by 9:00. At nine o’clock, in most cities, it just feels kind of weird to have that late of session. So 7:00 a.m. all the way until 9:00 p.m.

So we’re looking at like 14 hours per day, I would say, typically Monday through Saturday you can count on that kind of schedule – maybe not, a Friday or Saturday night, but there’s going to be people, depending on your niche, that may want to come in during that time. Maybe they can find it sort of easier during that time or want to do like dinner in a counseling session. And then Sundays, you may get some people on like a Sunday morning or Sunday afternoon. I think Sunday night would be pretty tough.

So you look at that, and so 10 to 14 hours per day, 6 days a week, that’s 60 or 70 hours that is available in that single office. Well, you look at what the typical private practice owner tends to do to make a decent living, and I would say most of them are doing 20 to 30 sessions per week. Those are sometimes evening sessions, daytime sessions. They’re not usually super effective on how they schedule. They don’t often batch them together, but that private practice owner has a lot of good reason to give you a day or two. I mean, they may be able to cover most or some of their rent based on how you guys have as your model.

So one concept to think about is that in exchange for flexibility in the terms of your lease, in the terms of your payment, you may, in some months, end up paying more, which is okay, because you want to have that flexibility so that you aren’t ending up paying for something when you don’t need to use it. So worst case scenario, you’ve got $500 or $1,000 a month that you’re renting an office and you have nobody come, like that’s just like draining money from your personal bank account or your business bank account.

So how might you structure that? There’s a couple of different ways. I’d say it’s kind of a rule of thumb. You don’t want to pay more than 10% to 20% of your gross money coming in. So if you’re bringing in $1,000 a month, you typically don’t want to spend more than around $200 for rent. So if you’re bringing in $1,000 gross, that’s about 10 sessions. So 10 sessions, $100 each, that’s 1,000 bucks.

And so you’re looking at about $10 to $20 per session or per hour that you’d want to shoot for. Now, this can be more or less depending on kind of what the arrangement is with that landlord or the person you’re leasing from. But there’s a percentage-based model, and so you could say to them, “I want to pay 20% of whatever I bring in gross, and that will be my rent,” or there can be a kind of usage-based model. So you get Thursdays for $125 per month, or you get Thursdays and Monday nights for $200 a month, so it’s sort of like by the day.

So how would you negotiate that? Well, it’s really going to be based more on kind of relationship, where that person’s going. I think getting to know some clinicians in town is definitely a first kind of spot to start. So starting with making a list of who are some solo practitioners that have offices that you would like to meet. And so just sending an email about connecting with them and letting them know that you’re looking for a space to sublet from people, you’d like to talk about if that’s something they’re interested in to do during off-peak hours for them, and that you definitely don’t want to take away from their practice but you’re looking to launch your own practice. You definitely don’t want to just jump into a 1099 or a W2 situation if you’re looking at starting a practice. You want to just be straight up renting.

How to save on space to make more money

So then, you reach out to them, you talk to them, and that’s when you might want to ask to look at the space, you might walk through. It’s nice to have a lobby, but from 2009 until the summer of 2014, we were in an office that was a single office – it was actually a double office. There was one person that rented the back, there was us who rented the front, and then we had a shared lobby. We were both counselors.

So the office in back was, we’ll call them ABC Counseling, there was us, Mental Wellness Counseling, and then the building name was Associates in Clinical Practice. So it was very confusing as to like how and where like you go. So this question really resonates with me because I had to say, the building sign says “Associates in Clinical Practice”. We actually share this space with other clinicians. You’ll just want to make sure that you use this address, go in this door, go ahead and have a seat right in our lobby, and we’ll get with you as soon as it’s time for your appointment.

So you start negotiating and start talking with the person, so what’s reasonable? Well, it’s sometimes good to just know how much just regular offices are going for. In most towns, they’re going to kind of give a classification of office space, and so a nice downtown office might be called a “Class A” or a “Class 1” or something like that in your town, and then there might be like kind of “Tier 2” or a “B” or “C”, so there’s kind of an idea of how much it costs per square foot per year.

And so just calling around and asking landlords. If you see “for rent”, just call in and say, “I’m just trying to get an idea of the area. I’m not ready to rent or walk through it. I don’t want to waste your time, but just wondering, how much is a 500 square foot space?” So 500 square feet is going to be an office and part of a small lobby. So if you kind of think through kind of how big that would be, we have a 2,000 square foot office. We have four offices and then a larger kind of main lobby, and that’s 2,001 square feet.

So you’ll then start to get an idea of the area, you’ll reach out to some people, and then when you start negotiating, you would want to – I would say I like the idea of doing a percentage of what you bring in. That’s, I think, a really strong model to say, “I’m willing to give you –” and then say the upper limit. So this office is typically going for $600 per month, or if you’re working with the landlord, then they would know how much it’s going for the subleaser.

So I will give you this amount per month. So when I had our 20% – when we were paying 20% of what we brought in, our upper limit of what we would pay was about $100 more than what the other office was going for. And so it was a way for us to say, “Hey, we get that some months, you’re going to get less money, but there’s going to be other months that you get more money. And as I grow, you’re going to grow too, and I’m going to remember that as we start to go forward.”

Also, if you’re going to be doing the pay by the day, I would suggest shooting for four-hour blocks instead of having an entire day if you can. And so a noon to 4:00 or a 4:00 to 8:00 rather than you get all of Thursday, because you don’t want to burned out, and also, those morning appointments, they don’t tend to be as popular as an afternoon, a lunch and evening appointment.

Saturday appointments, often times, established clinicians aren’t working those, and people really want to get in on Saturdays. I know Sarah, who joined our practice just a couple of months ago, her Saturday appointments filled up so quickly. And so I would highly suggest when you first start out, if you can offer some Saturday appointments, especially Saturday morning when maybe the teenagers are sleeping in and a couple wants to come in for counseling real quick, or other folks, I would definitely suggest that for some working parents.

So if we kind of review, you want to know your area, you want to just kind of have an idea of levels of kind of class of offices. You want to have an idea of cost per square foot per year or per month. You want to have an idea of kind of what people are asking for, then you’d want to shoot for having 10% to 20% or so of your overall gross going towards your office space, and then you just want to start approaching people. If you feel like the office space itself, like the décor doesn’t really match your look, if you feel like the person’s really hesitant, I would just move on and start talking to other people. Because if you start on that foot, it’s probably going to sustain.

Realize that you have to flexible. Realize that as you are in someone else’s office, you’re going to have less control over the environment, the look, the music, the style, all of that, but that’s part of why you’re getting a discount. That’s part of why you’re kind of bootstrapping at the beginning, and honestly, I found that clients just don’t – they don’t care as long as you’re a good therapist. I mean, it’s really nice to know I have like my ideal office, have the look that I want, the music playing, and the lobby that I want, but it’s just – it’s so good to just start off small, which leads me into my week.

So I told you I was going to talk a little bit about balance. So I left my full-time job in March. You guys all know that. If you’ve been listening, you know that I went full-time private practicing, consulting then, just doing this sort of stuff, private practice, Mental Wellness Counseling, Practice of the Practice, becomeaconsultanttoday.com, all that stuff, and I’ve been dealing with just really weird emotions. So it was last week, and I think it was Thursday morning, it was my last day of work before I was going to kind of take a couple days off, and my little daughter, Laken, she’s now 10 months old, cutest little thing in the world, just so fun, she was super snuggly in the morning, and we are all kind of like dozing in and out of sleep and she was in bed with us, and my four-year-old was off kind of playing by herself, and I kept kind of waking up and feeling guilty that I wasn’t going to the YMCA to work out. Like you guys know that I have back problems. I felt guilty about that. I felt guilty about the fact that it was like eight o’clock and I was still sleeping and I should have been like blogging or doing something.

How to keep moving up

And I’m just realizing how this whole like 40-hour work week plus is just what we’ve been told our whole life. You achieve in high school, you’re well-rounded in high school to getting to college, you go to college, you do a good college, try to get into the honors college, maybe even double major so that you can get into a good grad school, you get into a grad school and you double master that. You want to get a good job that has good benefits. You then get a decent entry level job or maybe even a crappy one, and then you get a better one and then you get this full-time job that’s your ideal job, and then your realize that, “This isn’t what I want to do,” like “I don’t want to work 50 hours a week,” and I don’t want the only way for me to make more money to become a supervisor that has even more time you have to spend on things, and I’m having a hard time with it, because I’m so used to that 40-hour week that I feel like this last weekend, it was rough for me.

My cousin came in on Friday, and he came in from Colorado. We went out to his parents’ place, which is on a lake. I never ride on sea-doos, but we road on these jet skis and had a barbecue. The next day, our friends from New York and from D.C. came in. Their plane was delayed, and we ended up going out to see this band, Pink Martini, who is awesome. If you don’t know them, they do all these like Latin, fusion, Cuban, Eastern European style, like super cool. So that’s playing in our lobby now.

I hang out with them, and then our friend from Washington came in and we saw her on Tuesday, and then today, we have other friends coming into town. I mean, it’s just like crazy busy here in Traverse City because it’s the National Cherry Festival. People are all over the place. But I’m like, “Okay, so this is like my new life, but what if don’t make money?” and all this fear and this worry, but it’s just like, “No, Joe,” like “calm down. You’ve looked at the stats. You know how much money is coming in. You’ve looked at your monthly income reports,” like not working a 40-hour week is okay.

And you know? Like I struggle with it. I struggle with in the evening not jumping on social media and planning something out, not blogging more, because I just had so much fun with it. But I’m learning to set these boundaries, and I think the connection that I see between asking the subleasing question is that you have a mindset of abundance, a mindset of that life is on your side, that you can get through it, but also a life of – don’t spend like the average American. Pay off your debt, be smart with your business, bootstrap it if you need to, but then, later on, it’s okay to relax a little bit. It’s okay to have that balance. It’s okay to give yourself five genuine days off.

My friends, Kelly and Miranda from ZynnyMe, are taking all of July off. And they sent an email out and said, “Hey, we’re taking the month off,” and it’s awesome. I was texting with Kelly the other day, and she’s going on vacation and she’s trying new things, and it’s like we need to do that. We need to just like find that place where we allow ourselves, we give ourselves that permission to just decompress and not just work. This guy that I follow, Rob Bell, he’s got this podcast called the RobCast. I’ll put a link to it in the show notes. But Rob often says – and I think he’s quoting a rabbi, Rabbi Heschel, I think it is, that “We’re human beings not human doings.” We’re human beings, not human doings, and I just – I don’t do that real well sometimes.

So that was a really long-winded answer, but I felt like I kind of verbally processed a lot of why like that question really resonated with me.

So a couple of things, I’m really thankful to Brighter Vision who has just been an awesome sponsor of the show: brightervision.com/joe. You can get a free month – just check them out. They have such good content and they do such good work with websites. Also, if you want your personal invitation to theconsultantschool.com, you can go there and you’ll get an early bird invite when it goes live. So all you’re opting into is that you want to know about theconsultantschool.com a little bit earlier than everybody else.

So I talked about a whole bunch of things, and I’m going to link to that in the show notes. Again, that’s practiceofthepractice.com/session89. So if you want to leave me a question, just like we had today, you can just go to speakpipe.com/practiceofthepractice. It’s a great way to just leave me a question, and I love answering them. I love getting emails. I love reading your reviews. You guys rock. You’re such an awesome audience. We’ve been growing by about 2,000 listens per month. So thanks so much for sharing this. You guys have been sharing on Facebook and Twitter and Instagram, and my Pinterest has been exploding, which has been cool.

I just love you guys so much. It’s so fun to hear from you, hear the steps you’re taking, that all these folks that are in grad school are listening and saying that like, “How am I going to like dominate when I get out?” Like you guys are going to kill it. Like you guys are going to kill it, and I am just so excited to hear your story and watch you blossom and grow and launch and kick some serious butt.

So thanks so much for letting me into your ears and into your brain. You guys are amazing. Again, thanks brightervision.com/joe. They’re super awesome, and looking forward to talking to you next week. See you.

Special thanks to the bands Silence is Sexy and Cat Hunter. Liked your music.

And this podcast is designed to provide accurate and authoritative information in regard to the subject matter covered.  It is given with the understanding that neither the host, nor the publisher is rendering legal, accounting, clinical or other professional information. If you want a professional, you should find one. See you.

 

2 Comments

  • Seida says:

    Joe – thank you so much for the feature and for answering my question so thoroughly!! I really appreciate it and I know I’ve said it before, but I will say it again (just in case you need to hear it today) please keep doing the work that you’re doing! You have no idea how much this speaks to my life right now – there are so many similarities.

    I believe I emailed you about 2 weeks ago to let you know I had discovered your podcasts and I have made my way back to the beginning episodes!! They are so very helpful and I have learned a lot. I appreciate the humor and honesty! Surprisingly even in this profession, not everyone is willing to help out in that way.

    Again, thanks so much!

    Seida

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