Just tell him you will continue to pay him as and when you use the property, why should you feel like an idiot because you choose to go by what was the rule to start with? He is running a place which sounds illegal anyway, someone who sounds greedy and thinks hookers are roling in it so he will try anything to get his hands on what they are supposedly earning. You could pay him upfront and end up being ill or whatever. Stick to what was decided in the first place and stick to it no matter what he says.