Enlightened Practice Podcast
Are you weighing the options of subletting a colleague’s office vs. signing your own lease? Either decision can mitigate some risks and burdens, but what is optimal for you and your patients? Dr. Ken Braslow and Dr. Kari Kagan revisit their own experiences and share helpful tips to help you make a well-informed decision.
Transcript of the podcast
Ken: Hi Kari. Welcome back.
Kari: Hi Ken. Thank you.
Ken: We’re going to talk about subletting, today, and the pros and cons of starting out with subletting a colleague’s office instead of signing your own lease. And this is an important decision point for new grads because there’s a lot on the line if you’re signing a lease. And subletting can relieve some of that burden, but it also presents its own set of issues. So, I thought we would give a forum to think this through. So, I’m curious, when I started, I did not sign my own lease; I subletted. I’m curious if that was your approach or, what’s your past strains with them?
Kari: Yeah, I did a sublet too in my first few years out of grad school and when I was first getting started in private practice. I think one of the pros of doing it, especially early on, but probably any time you’re just getting started in private practice. It’s just that it’s a quicker and more flexible option. So, if you’re subletting from someone, the hope is that it’s already furnished, that they’ve already taken care of all the details of the lease and all you have to do is show up and sit in the chair and do the work. And there’s something about that that’s really relieving when you’re first getting started. It’s not having the worry about the burden of the place you’re renting and just get to focus on the clinical work. That’s what felt like a priority to me and that shifted a little bit over time. But in the beginning I was very grateful that I could just easily slip into an office and didn’t have to give it much thought. That was one of the advantages early on. What about for you?
Ken: Yeah, I wanted to make sure the part of town that I set up practice was going to be a good fit for commuting and my own life. And then also, was it optimal for my patients? So, subletting relieves a really big burden at the beginning with commitment to a particular location and sometimes the location is fine, but the particular office is hard to know. I remember subletting one where I thought it was great. I was in session with my first patient and then I heard a very loud toilet flush and we both kind of looked at each other and then went on with the work. But that’s the kind of thing where if you’ve signed a long term lease and you didn’t know that was going to happen, you’d be potentially pretty disappointed. Not that subletting doesn’t require an agreement, but it’s often not nearly as long as what a commercial lease would require. How long were your sublet agreements? Do you remember?
Kari: Actually, mine were all month to month, so there was a lot of flexibility there. And I’m pretty sure actually, at least in the Bay Area, that was consistent across the board that a lot of people had a month to month agreement for their subleases. And I know for people who decide to actually rent the office space, usually one year lease agreements were even rare. Sometimes it was three to five year lease agreements if you were going to be on the lease, which is a big commitment for early on in private practice, I think.
Ken: Yeah. The other thing that I really liked about subletting at the beginning was that I actually wanted to test out two different parts of town. And signing one lease is stressful. Signing two is just a non-starter for most folks. Plus, even if I knew for sure I love both offices, if I’m not going to be in there full time, obviously I can’t be in two places at once. Then, do you want to take on the role of being a landlord, if you will, and making sure that you have subletters fill the days you’re not in the office you’re leasing. So, it also just allowed me to be flexible and plug and play with my days.
Ken: On the flip side, then you are billed and the person who holds the lease they have right of first refusal for which days and times they want to be in there. And sometimes that gets frustrating as your practice grows and you really want to be able to, I remember asking the person I was subletting from, I had Monday, Wednesday, Friday and he Tuesday and Thursday. I asked if there was any flexibility in that and he said, “No. Absolutely not! This is why I set this up this way. I only want Tuesdays and Thursdays for the rest of my career.” And I thought, okay, well, I guess I’m not going to have Tuesdays unless I have my own office somewhere else, that would be a downside.
Kari: Yeah, I agree with that downside. It can be tricky to try to fit in clients into a very narrow window and it could also make it a little bit harder to actually find an office space in the beginning because you have to actually find someone that has enough flexibility to accommodate the schedule you’re hoping for, which you know can be hard to find. So, I would say that’s a major downside as well as just not having control over the office space at all. Some nice landlords, if you will, might include you in the decoration process and all that, but usually in my experience the office was already established and it was their style. And if it works for you, it works for you, and if it doesn’t, then you’re kind of stuck with whatever they have in terms of office décor and the therapist chair and all that kind of stuff. And that’s definitely a downside to lose control there.
Ken: Very important to sit in the chair when you’re testing it out.
Ken: I remember one office, they had this kind of standard therapist chair that has a headrest that kind of pushes your head forward a little bit as if you’re flying on an airplane, and I was not feeling it.
Ken: Just because of the chair, it was a nice office but what was I going to do, bring my own chair with me each time? It’s just not realistic.
Ken: And you have to think about as you’re marketing your practice, what does the décor say about you, your brand? If there’s floral furniture with plastic on the cushions, is that what you want to market yourself?
Ken: So that would be a concern. And the other thing back to just on the business side of things, what if you only have Monday, Wednesday, Friday and you have a patient that says, well, I can only meet Tuesdays. So, that is one significant disadvantage of the whole concept of subletting is that if you want full maximum availability then you probably want to go ahead and lease your own office.
Kari: Yeah, I would agree with that. If you’re planning to have a full schedule five days a week it might make sense to take on your own office. Another disadvantage or downside to subletting is that, I guess it depends on the situation, but many times you don’t have your own space in the office to keep things there, to store things there. So, that was often the case in my experience is that I could maybe leave an item or two, but not like bring my whole library of books for example.
Kari: I would often feel like I’m shuffling back and forth between the office and home and having to like drag books with me if I wanted to use a certain book with a client. Or I would find myself in a position where I didn’t have a book that I wanted in the middle of a session. So that was a downside, not huge, it was inconvenient. But it’s just another part of it not being totally your own.
Ken: Yeah, similarly, say you wanted a printer in the office and there isn’t one. You’re not going to bring in your own printer. What if their desk is messy?
Ken: And you don’t want a desk or a messy desk. You’re going with their WIFI speed. So, hopefully it’s not an issue, but if they have DSL you’re kind of locked in.
Ken: In terms of signing a long-term lease, that has its pros and cons. Sometimes, you can get a building owner for a longer lease to do a build-out for you or customize an office space that’s more therapist-friendly. I was lucky enough to have that. But you do need to allow sometimes months for a construction to be done in the first place. And you can expect a pretty hefty long-term lease if they’re going to do that for you.
Kari: Yeah, that is an advantage for sure. You get to have your own space not only in like the décor but also, the actual physical space you can make work for you. I’ve known people who created a waiting room for example when it was just one big room otherwise. So, that’s definitely an advantage, and also just depending on what your practice setup is. So, if you have a group practice with multiple providers in it already it might make sense to go ahead and get your own lease because you know you already have the people to take up the office space, as opposed to if you’re just one person getting started. It’s a little bit riskier I think to take on either just your own office space or an office space that has multiple suites or office options than needing to sublet.
Ken: Oh, yeah. That’s a good point. You brought up waiting room also. I’ll say, I’ve rented one office that did not have a waiting room and I was the primary lease holder on the office, but a bunch of us rented a small office in the same hallway. So, I was a subletter on the waiting room even though I rented the office.
Kari: Interesting. There’s lots of creative options.
Ken: Yeah. I mean, the alternative was to have patients just standing outside the office and that’s not necessarily ideal.
Ken: You have to think about your brand and what you’re going to put on your website, what are you going to tell people? I’ve seen therapists just put a chair outside of an office, pros and cons of that.
Ken: Okay. I’m going to say in general regardless, you should always have renters insurance. You just never know, and general liability insurance. Sometimes, that’s included with the malpractice and sometimes it’s its own separate policy. If you’re a primary lease holder, they are more often than not, not thrilled about malpractice policies coverage. They sometimes will insist on your own separate liability policy that names the landlord in the liability policy as well. So, that way if somebody slips on a banana peel in your office both of you are covered, the landlord and you.
Ken: Leasing your own office also is more expensive when you’re typically covering the internet, cleaning, trash, those kinds of things. Usually as a sublet that’s all included.
Kari: Right, exactly. Yeah. I think the advice that I was given probably depending on the situation, but if we’re really thinking about an individual person who is just getting started in private practice, I guess it depends on your priorities. The advice that was given to me was that it makes sense, or it’s safest or less risky to start with subletting for all the advantages that it has. It’s cheaper, you get to try out different locations, it’s easier to end it if something isn’t working out or if you’re not getting the clients that you were thinking you would. And then it’s pretty easy from there if it’s all working out to then transition into your own office space. I think for a lot of reasons the advantages outweigh the disadvantages. Although, I think it depends on the situation too and the disadvantages are real.
Ken: I really like that point of thinking short-term and long-term. You can always find a long-term lease a month later or six months later if it’s not working out.
Ken: Or you just want to switch gears, but it’s hard to get out of a long-term lease if you start out with one.
Ken: So, I think two thumbs up then for subletting to start out in spite of its limitations. Okay. Well, great Kari. Thanks for thinking about this today and look forward to chatting again soon.
Kari: Yeah, me too. Bye.