Saving up for an Office/Warehouse..

[WillS]

I posted the other day on how we lost 2 employees this month. Me and my 2 other business partners have decided instead of hiring 2 more techs, we are going to work longer hours on the trucks and be on 6 days a week. The point of doing this is to save up for a few additional items we need.

I really want to move into an office/warehouse type building. I found one in a great location off the Vegas strip (not in the ghetto) for $900/mo. I'd like to have 6 months worth of rent for this, deposits, etc saved up. Like I mentioned before, we don't have loans, etc. and pay for everything in cash as we go. Since I didn't win the Powerball, this is the next step in our growth plans.

I'd like to get some information on anyone that has moved into a warehouse/office and how you did it. Did you pay cash upfront, buy one, take out a loan or what? The reason for this warehouse to is to have a storefront to have rugs dropped off, employees no longer coming to the house (it's getting to be to much w 3 trucks now) and of course getting my home garage back without tons of chems, equip, etc. all over it.

PS. I turn 30 yrs old in 1 month from today and want to accomplish this by then. My main goal is to eventually not be cleaning at all and be strictly Sales/Marketing. My other biz partner would take on Operations and the 3rd would take on an CFO/HR type role. I feel like we need this Office front to keep accomplishing these ideas and more.

 

[Desk Jockey]

Don't buy, lease and don't lease for an extended length until you know that's where you want to be.

We bought a second building which appeared fantastic. Only it's on the opposite side of where are work is in that town and so it because primarily a storage facility. An over priced one for its current use.

 

[Russ T.]

I rent a cheap heated shop for my rig. I've been able to pay ahead (3-6 months) and it's done wonders for my anxiety.

I didn't think I could afford the extra expense....2 years ago.

I was wrong

 

[Cleanworks]

I am a one man operation but I rent a shop (1100 sqft) which I use for area rugs and storage. I was lucky to find it for 700 per month. My rug cleaning pays the rent and a little more, it also gives me space to work on my trucks and gear. If you are doing rugs, have you approached your local drycleaners to take in rugs for you. I have about 20 drycleaners acting as agents and I pay them a commission on each rug. They also refer inhome cleaning to me.

 

[clean image]

Supply and demand will dictate your lease

Location, location, location.

Around here it's 3 year to lease. My friend who runs a pool company has great place, 3 year lease, and they raise his monthly premium 1 year in....so read your fine print

We currently rent month to month....

 

[TomKing]

Lots to think about when leasing.

1. What is the going sf price for space?
2. Who takes care of repairs? triple net etc. This addresses who pays the property tax and common area maintenance.
3. What have the utilities been in the past for this space?
4. What will your insurance be?
5. What's your security deposit?
6. Do you need to name your landlord on your insurance?
7. Do you need a rider for insurance? I would suggest everyone carry a 2 million umbrella.
8. Six months rent is crazy? You need 3 months expenses for your business period. This is the number if no work was coming in. Do you know this number? This of course is not going to happen so 3 months is really 6.
9. Look for space that is about 40% more than you currently need. 18 months from now you will need and want more.

You will have capital expenses when you move in. Believe me it happens. Set a budget for the move in.

Things to plan for
1. GOOD SIGNAGE. It will pay for itself get this up asap
2. phone lines and phone system.
3. office equipment
4. storage racks
5. plumbing upgrades
6. electric upgrades
7. electric door openers
8. security system
9. New promotion materials web site updates

Before you sign make sure all mechanical is checked out by a HVAC company you trust. Don't take the landlords word for it get it in writing. The maintenance of this can come back on you and can be expensive. Put in the lease that the landlord is responsible for securing the zoning for the use you need. 3 years is what most will want. Put in the lease that any electric or plumbing found not to be to code his theirs to fix.

You can also write a lease where your payments year one are less and they climb each year. The landlord gets the same but it eases you in. It also helps you climb to the rate you will probably be at when you renew and that is less painful. I have done that twice and just signed for another property doing the same thing for a 7 year lease with a 2 year opt out clause.

Example Year 1 $700, year 2 $800, year 3 $900, averages to 800 and when you go for the renewal you can negotiate to 900 for the next 3-5 years.

Happy to talk live on this if you need help.

Congrats your business will move to the next level.

 

[Ron K]

Are purchase prices out of the picture? I agree running employees out of your home residence is not cool.

 

[Nate The Great]

Are purchase prices out of the picture? I agree running employees out of your home residence is not cool.

Not everyone can afford to live where you live uncle Ronnie...........

 

[mirf]

Tom covered a lot but I would do 1 more thing. take as many photos as possible. Any problems or areas you might improve.
Two or three years when you chose to move on it is much easier to sat this was preexisting. Print them with dates and store by your lease.

 

[Ron K]

Not everyone can afford to live where you live uncle Ronnie...........

I can't afford not to!
Hey when can I stop by?

 

[Nate The Great]

I can't afford not to!
Hey when can I stop by?

When you can show me how to wheelie a unicycle........ Anytime you want bud!

 

[Chris A]

I'm struggling with this too. Half of me wants to lease, other half wants to build a big ass barn in my back 40. Either way I'm running out of room.

 

[Shane Deubell]

Buying is completely different from renting. Buying you need to have some nice reserves built up for repairs and long term replacement. Plus put money aside every month for this stuff, a commercial roof repair/replacement can be stupid expensive. For example if your mortgage was $900 month you still need to put aside another $3-400 month for repair and replacement (plenty of calculators you can find online).

Leasing will depend on if you deal with an independent landlord or a professional property management company. An independent is whatever you negotiate but a professional management company be very very careful. As Tom lined up who is responsible for what and the big problem is a commercial lease is basically debt in practical terms. So if you sign a 5 year lease for $900 month you owe that landlord 60 months of payments for $900. If you go out of business too bad, still owe the money personally and even a bankruptcy judge probably will not waive it all away.

I do think some space is best to separate business from personal, just make sure to ask yourself all these questions first.

 

[ruff]

Another way to look at it, is as an investment. Not only in your business but an actual investment. Therefore the appreciation potential of the specific building and location is very important.

Say, the business does not pan out as planned. Is it an area that has a good appreciation potential?
You'll never know with certainty, but doing some research and talking with people who know your area's real estate well, can be of great help.

It sure will be a nice "problem" to have, if the value increases.

 

[TomKing]

Buying is completely different from renting. Buying you need to have some nice reserves built up for repairs and long term replacement. Plus put money aside every month for this stuff, a commercial roof repair/replacement can be stupid expensive. For example if your mortgage was $900 month you still need to put aside another $3-400 month for repair and replacement (plenty of calculators you can find online).

Leasing will depend on if you deal with an independent landlord or a professional property management company. An independent is whatever you negotiate but a professional management company be very very careful. As Tom lined up who is responsible for what and the big problem is a commercial lease is basically debt in practical terms. So if you sign a 5 year lease for $900 month you owe that landlord 60 months of payments for $900. If you go out of business too bad, still owe the money personally and even a bankruptcy judge probably will not waive it all away.

I do think some space is best to separate business from personal, just make sure to ask yourself all these questions first.

I don't sign leases that I am personally responsible. That is the benefit of the corporation.
My corporation is leasing not me.

 

[Papa John]

Geez! Ive been wanting to Buy or rent a bigger space too! But in my area you need to add a Zero or two too all the examples in other posts
Good Luck!