Renting a shop?

[BSDeality]

Hey guys. I'm looking to bounce some ideas here. I'm currently a one-man band and I'm looking at renting a shop for my operation.

Right now I've got all my equipment at my parents house and its getting tight and limiting my companies growth. I've been growing ~30% a year for the last three years since my official start of the business. I cannot see myself improving too much more next year without expanding to a crew. 2008 is going to be my bust-out year as I have joined a high-end property maintenance company and will need one crew at least to sustain that end of the operation.

My plan was to purchase some property I located over the summer this fall and build a garage/shop with a living area above it but I underestimated the time to deal with the Realtor and the city, so it looks like its too late to buy and build for this winter.

So I have joined the PM group and currently have no where to store the needed equipment. not to mention the tons of equipment I already have. This weekend I stumbled across a 30x48 shop that is in the city next door. The owner lives on site and rents this shop and another monsterous shop that his son rents from him too. He wants $1,000/mo including electric for it which I feel is a good price for the location and size. it's got 10' ceilings and 9' wide doors so I can get my big truck in there if I had to. He also expressed some interest in bartering landscape services for part of the rent. His son's friend takes care of the lot in the winter. One other positive is It's on a month to month basis, so I have the ability to get up and go when I do finally purchase my property without having to risk getting locked into renting a shop for a few extra months than I need.

I'd hate to loose this opportunity since I already missed my property purchase this fall. I just wanted to know what others thought?

Currently I have two trucks, a 6x12 & 8x22 trailer, a Kubota L48 plus a bunch of attachments, a couple mowers, tons of small power tools, the hydroseeder, spray rigs, aerator, etc. In the spring I'll be adding a Cabover with a dovetail bed for another maintenance truck plus possibly another small Toyota truck. Then I need to equip the truck with 2 mowers. I think its just the right size for the operation I will have in 2008, I just need to act now.

[cat320]

that does not seam bad for something that size with electric but 9' wide doors don't seam big enough espcially if you have your truck parked with your blade on ,you can do it but it's a tight fit that's only 6" on each side maybe. so you can still look for your land and get things going while your there on the month to month and if you barter some of your stuff probably bring it doen a little .

[hlntoiz]

Matt, Do you own your own house? If not start looking for something to build a garage on. Maybe find something a little out of town in the woods where no one will bother you. This way you can allocate $1000 a month towards your mortgage instead of someone elses pocket. If you think you can afford $1000 a month just for a garage you could spend another $1000 and that should get you going on a house with at least an acre or 2. Then if you out grow your setup you will be doing very well and be established enough to take that risk.

JMO! That is what I have done this year. Bought a house with an acre and have plans and a permit for a 24'x50' barn garage. Now the $600 a month that I was paying for rent is now going toward my own property. Now I am just hoping for some big snow this year to get the foundation in the gound next spring.

[cat320]

In reality that is always the better thing to do if you can do it. buying a house or land is always a good move. but timming is key if you can wait to do this or you need more room right away. it's always better to pay your morgage off then give it to some one else. maybe you can find a place and rent some spots out to other guys looking to park equipment .

[hlntoiz]

In reality that is always the better thing to do if you can do it. buying a house or land is always a good move. but timming is key if you can wait to do this or you need more room right away. it's always better to pay your morgage off then give it to some one else. maybe you can find a place and rent some spots out to other guys looking to park equipment .

Sub leasing is usually an issue with any landlord. For obvious reasons.

[BSDeality]

I have located a 4 acre piece of land that I had intended to purchase this fall and build a garage/apartment on then in a couple years build the house on the same piece. Dealing with the realtor took much much longer than I anticipated. I can still purchase the property now, but the chance of getting footings in the ground and construction started and framed in before snow/frost is very very small at this point.

I'm really in a tough spot because I can purchase the land, deplete my capitol and spent $1200/mo on mortgage with no storage for my stuff and then have to scrape together some money to put up a temp metal building Then I also have to outfit a maintenance truck in the spring. OR

I can take this shop on a month to month basis for $1k/mo (less a little for bartering), move my gear in immediately and use some capitol to outfit the new truck. With any luck the property will still be available in the spring and I can go through with the purchase then and take the summer to build the house and put up a metal building for the shop.

[PSDF350]

I think that since you said your new deal doesn't take affect till next year, why not buy property, leave equipment where it is. Then next spring build and move in. This way you have the property. Instead of spending the next 6 months or more paying rent.

[BSDeality]

ideally I would like to do just that. I've got equipment coming out of my ears right now. I park the two trucks, two trailers, a flatbed body, and one plow behind my fenced area at the house. There is only 5' of room left for my second plow which I may be picking up this weekend. Part of going on with this PM Group requires trucks to have company signs on all sides. I had/have magnets for them since I'm allowed only one signed vehicle on the property to be visible. My neighbors are real PITA's about the outdoor equipment I already have.

I wanted to get the new cabover truck + mowers setup over the winter so there are no surprises come Mid-March when spring cleanups start. I don't want to get caught with my pants down in March waiting for a truck body to come in or for a mower to be assembled at the dealer. Right now storage space is beyond non-existent for those pieces.

I've been keeping my eye out for another piece of property that has a barn or garage on it already to buy instead of rent, but that type of property is extremely hard to find around here. I think this month to month deal will work out the best since I wouldn't be stuck with a 12 mo agreement when I buy something in the spring.

While the core of the work for the PM group begins in April, I still have a lot of plowing to do for them this winter too.

[motormouse]

Am i missing something or are you not buying the property you wanted because you can't build before winter?? That doesn't make much sense to me at all. Look for property to buy and screw renting. $1000.00 a month added to a mortgage goes a long way towards property. The one problem could be the price of property in your area. Even with housing market slowing land in my area is C R A Z Y expensive

[BSDeality]

Am i missing something or are you not buying the property you wanted because you can't build before winter?? That doesn't make much sense to me at all. Look for property to buy and screw renting. $1000.00 a month added to a mortgage goes a long way towards property. The one problem could be the price of property in your area. Even with housing market slowing land in my area is C R A Z Y expensivesuburban NJ is very similar in price to the area of CT I'm in. The property is 4 acres and $230K

Land mortgages seem to be hard to get, especially with the deadening housing market. One bank refused it, the other offered only $130K towards the property. I don't have $100K sitting around to cover the balance unfortunately but could acquire private financing if necessary.

[cat320]

wow only $230 for 4 acres. in my town a buildable lot is starting at $250 10K sq ft they where selling garage condo's next town over for me and i think they wanted 230 for only 1,400 sq ft with a 1/2 bath no office and on 14x14 door.

now these peices of land your looking at are all commercial zoned? or 1/2 and 1/2. or are they residence A ?
I know what you saying but i have to agree when putting money into a rent. but your lucky it's only month to month and if your at a point where you need to think about your nrxt move ant what you will do then I do think that is the best rought to go. Things happen for a reason and this maybe happeing that way to get you to a better location or what ever. .

[AL Inc]

Matt, what about possibly renting a storage unit with some outside space for this winter, just to get some of the equipment and trucks out of your parents place? Sure the shop would be nice, but I would do the best with what I had for now, and sign the deal for the land. It does sound like a good deal.

[BSDeality]

now these peices of land your looking at are all commercial zoned? or 1/2 and 1/2. or are they residence A ?
I know what you saying but i have to agree when putting money into a rent. but your lucky it's only month to month and if your at a point where you need to think about your nrxt move ant what you will do then I do think that is the best rought to go. Things happen for a reason and this maybe happeing that way to get you to a better location or what ever. .The property falls under 2acre zoning residential, however I can cover up to 15% of the property with building if I want. The zoning is very similar to my parents place. 1 commercial vehicle outside is fine, everything else has to be out of sight behind closed doors. The lot is half cleared half wooded right now. my intention was to build a garage/living area above it this winter but i'm out of time. It may actually be better to build a metal building in the short term which would be quicker to permit and build. Then build the house down the road only because the city won't let me have two separate living spaces on one property due to too many illegal apartments that get run that way. If I built the garage/living area now I'd have to physically add the house onto the garage in the future and ideally I wanted to have them be separate buildings.

Why isn't anything ever simple?

[BSDeality]

Matt, what about possibly renting a storage unit with some outside space for this winter, just to get some of the equipment and trucks out of your parents place? Sure the shop would be nice, but I would do the best with what I had for now, and sign the deal for the land. It does sound like a good deal.I looked into it... a 10x20 storage unit is $300/mo. 10x30 is $450/mo. I could squeeze all the mowers and maintenance equipment in a 10x20 or 30. I didn't inquire about outdoor space, but with two trucks, and a large trailer, plus a tractor, the attachments (which I really would like inside so they don't get lifted), the hydroseeder... I think i'd be right around that $1000/mo mark again most of those around herplaces want 3 months up front and at least a 6-month lock-in.

[hlntoiz]

I have a name of a really great mortgage guy if you are interested let me know.

I know what you are going though, it sucks not having a garage. If you could go month to month then I would say go for it!

[Mark Oomkes]

Holy crap, $230K for 4 acres, no house, no building? I know, I live a sheltered life.

Just think of what $230K would buy for acreage out west. :grinz

[T-Zab]

Personally I would rent the shop for now. Renting sucks but your not straped to a mortgage you might not be able to afford either if things go south.
Sounds like you have thought this out, and your not just diving in blind.
I need a shop myself now, but things are getting lean around here. Hopefully the economy will start to rebound and wont I be such a nervious Nelly. I realize stagnant is not good, but if have to down size I wont be caught with my shorts down either.

[D Raff Inc]

Holy crap, $230K for 4 acres, no house, no building? I know, I live a sheltered life.

Just think of what $230K would buy for acreage out west. :grinz

I hear you Mark..If you think thats bad here in Here in Jersey (central)1 acre un improved (raw land no utilities) can range from $250K to $850K depending on the area. Thats residential! Commercial (if you can find it) can be at least 1/3 more to double and of course that includes (for free) rounds with the zoning officer and ever popular board of idiots, ooops i meant board of adjustment:eek:It took us 3 years to find and finally get through the town b.s.
Land is a premium here unless you go west or far south where its still somewhat reasonable..Sorry Matt you were a liitle off the mark on prices here.:grinz.But anyway enough about real estate 101. All here have given great advice and it seems like you have a pretty well thought out plan of attack just remember the old cliches of save for a rainy day and don't bite off more than you can choose. Owning land is an awsome thing when the timing is right. The pay off and savings can be huge. Worst case you could move on to the land ( your business) put up a temp building and work out of there until funds allow a perm building. Thats the worderful thing about living at home. Take advantage ! Also becareful of new endeavors that cause you to expand your equipment and overhead rapidly because if they fail you are still left holding the bag on the new equip you just bought to do that new work. Expansion is a great thing and can be profitable just be careful. Best of luck
Darren

[King of Diamonds]

Hi

The way land prices are and the current mortgage situation I would tell the realator you'll buy the property but you won't close on it until March, give them a hefty deposit and a letter of commitment from your bank. If you do a construction note that converts to a mortgage with a one year time frame you will only be paying on the principle on the amount that you have out which should be minimum until the building is going up. In the mean time rent the place for the $1000 month to month, when your building is done next June or July move in and convert your construction note into a mortgage.

I did this twenty years ago, bought 1-1/2 acres in a industrial park, put up a 60x60 steel building cost me $230k at the time, its now paid for and worth nearly $600k now, the rent is what bought me my new truck, best part I can right it off as a expense, lol

[snocrete]

suburban NJ is very similar in price to the area of CT I'm in. The property is 4 acres and $230K

Land mortgages seem to be hard to get, especially with the deadening housing market. One bank refused it, the other offered only $130K towards the property. I don't have $100K sitting around to cover the balance unfortunately but could acquire private financing if necessary.

WOW......I can see why your having a tough time:eek: It sounds like you have alot of prep to do for some really good work, and with property values being like that, $1000/month dosent sound bad for rent on a building like you originally mentioned? I rented mini storage space for a couple years, which is not as nice as one big building like that.........but the location of it was unbeatable, totally dead center to everything I do......definitly saves :cash on fuel n time. If you can get by with just enough space through a couple units it may work for you, and it sounds like you'll need it for at least the winter and maybe 6 months of next year anyway? Get situated coming out of winter/find property/close deal/get a plan/start to build/ etc............................................... ............. This sounds like a really GOOD problem:D.......Good luck!

[BSDeality]

As a little update, I had the real estate appraiser from my business group look at the property and he thinks its $80-100K over priced. Now I know why the bank would only offer to cover $135K of it. I do like the property, but I'm not going to pay a 85% premium for it.

I'm getting very close to renting the shop for the time being since there is no long term commitment. If the seller comes down on the price in the spring I'll buy it. Then I can erect a pole barn and once its ready I can move everything over and stop paying rent. I'd have to carry both rent and mortgage for 2-3 months while I build the barn but thats not too horrible.

I've been looking at the houses I'll be working at in the spring and it looks like I'll be able to get by with only purchasing 2 new walk behinds for mowing. The cabover truck is the only choice, most of these property's have long driveways lined with Belgium block so reversing a trailer in or out of them is not an option. If things do tank I'm only "stuck" with one more truck and two mowers. The truck would be easy enough to sell off if I chose, as would the mowers.

I thought about storage units, but a 10x20 is $300/mo and I'd need at least 2 of those for small equipment plus outdoor storage for my trucks, trailers & kubota L48. I would rather have the Kubota indoors if possible too and that won't fit in a storage unit. those two storage units plus the outdoor storage I need would have to be in the $800-1200/mo range.

[cat320]

evidently they are in no rush or do not need the money and will sit on the property till they get what they want but one thing i lerned especially if you want a certian thing is to nag the crap out of them. also what alot of people have been doing here is emailing all chamber of commerce memebers about there property some times you might wake some one up that was maybe thinking of selling. But repition does work .

[snocrete]

As a little update, I had the real estate appraiser from my business group look at the property and he thinks its $80-100K over priced. Now I know why the bank would only offer to cover $135K of it. I do like the property, but I'm not going to pay a 85% premium for it.

I'm getting very close to renting the shop for the time being since there is no long term commitment. If the seller comes down on the price in the spring I'll buy it. Then I can erect a pole barn and once its ready I can move everything over and stop paying rent. I'd have to carry both rent and mortgage for 2-3 months while I build the barn but thats not too horrible.

I've been looking at the houses I'll be working at in the spring and it looks like I'll be able to get by with only purchasing 2 new walk behinds for mowing. The cabover truck is the only choice, most of these property's have long driveways lined with Belgium block so reversing a trailer in or out of them is not an option. If things do tank I'm only "stuck" with one more truck and two mowers. The truck would be easy enough to sell off if I chose, as would the mowers.

I thought about storage units, but a 10x20 is $300/mo and I'd need at least 2 of those for small equipment plus outdoor storage for my trucks, trailers & kubota L48. I would rather have the Kubota indoors if possible too and that won't fit in a storage unit. those two storage units plus the outdoor storage I need would have to be in the $800-1200/mo range.

$300/mo!?:eek: for a 10x20.......I think I was paying $75/mo for a 10x30 at american storage....normal rate was $125/mo, but they had a special going, so some got knocked off that, and then some more got knocked off because I payed 12 months at a time.........

[BSDeality]

$300/mo!?:eek: for a 10x20.......I think I was paying $75/mo for a 10x30 at american storage....normal rate was $125/mo, but they had a special going, so some got knocked off that, and then some more got knocked off because I payed 12 months at a time.........I can get one month free with a 12mo sign-on with the storage units. But its still no bargain.

[cat320]

I think at that rate they figure they can aford to give away a month free especially if you have to sign for 12 months. You could buy a coverit portable for that money and own it.

[Lawn Lad]

It sounds like the storage garage you mentioned might be tight... but it provides you some separation from your current situation. The advantage to renting at this point is that it gives you time. Often we can feel pressured into buying or acting sooner then we are truly ready. If you can get the month to month lease you mentioned then you have nearly no risk. The $1,000/month lets you grow your business. When you are ready to move you won't continue to carry that cost - so you'll point that money towards your own property. But it sounds like now may not be the best time.

Building your own shop is not cheap. We bought our shop for 1/3 the cost of what it would have cost to build... you might say I'm not in a great neighborhood. Regardless, better neighborhoods in some Cleveland 'burbs are still only 50-60% cost to buy over build. Building may be an option in some scenarios - but to build a commercial building that can be sold back to the market for different uses is not going to be cheap. So unless you build for more limited uses (perhaps just your own), you begin to limit future options.

As said earlier, renting is an inexpensive way to delay the decision, buying existing is a good way to save over building if you can be flexible. Building new is nice if you have the business to support it and the market in which to resell what you build.

[BSDeality]

I decided renting is the best option for me at this point. Last week our town took a huge initiative to start going after home-run businesses that may be in violation of zoning regs. My neighbor has filed complaints with the town last year and I was on the radar for a while. I got into compliance right away but this year I've added a big HD trailer thats too hard to claim is for personal and business use, the Kubota L48, a 500 gal hydroseeder, plus another plow. All of which are outside currently. Now with the leaves off the trees everything is more visible too. If business goes south I have the ability to get up and leave at any point without being locked into a long-term commitment.

I'm going to start moving some of the big stuff up there soon. so I'm on the lookout for some pallet racking and a pot belly stove to heat the place if I have to make repairs this winter.

[Lawn Lad]

I have to imagine that the vendor we found in Cleveland for pallet shelving is a common role filled by different folks in other cities. This guy buys the pallet racking from businesses that are moving/closing, etc., welds/repairs what's needed and then repaints them. He'll also make custom shelving heights and add extra bracing as needed. They look good/clean but are inexpensive. I would recommend the Interstate brand - they appear to be most common place (Home Depot style shelving). If you get an odd type you'll be stuck with the limited flexibility. $40 to $60 for an upright and $15 ish for a beam. I'd also recommend getting wire mesh decking as opposed to building your own from wood. Wire decking is required in some places for fire safety. More practically - it allows light to get through your shelves more readily and you can see more easily than you could with solid plywood decking. We were getting it for $15 to $20 a half - or what would cost $30 to $40 per deck.

[BSDeality]

I don't need much racking yet, however come spring I'll have a surge of new equipment to store and will have to figure something out.

I'm on the prowl for a wood burning stove with a blower to heat the place and I'm trying to find a used 3K lb capacity electric forklift if possible. I have a set of forks on the Kubota L48, but I need something at the shop to load/unload pallets if its @ the jobsite. It would also be very nice for lifting plows/mowers up for summer or winter storage on racks.

Hopefully going to bring some stuff up there tomorrow PM if I have time, otherwise it'll have to wait until the weekend or next week.

[derekbroerse]

I think you'll find that shop a little small, especially for the price, but for now it solves your dillemma.

I'd see if the property owner will let you park a Sea Can or Semi trailer (in good condition, painted etc.) on the lot for that price so you can tuck away the mowers and such that you don't need right now.

I have a 45' trailer here with pallet racks all down one side, no I can't reach it with the forklift but man is it handy to be able to just put something away out of the way...

What is the zoning on the building you are renting? We have residential/agricultural here, no one say anything...

[BSDeality]

I think you'll find that shop a little small, especially for the price, but for now it solves your dillemma.

I'd see if the property owner will let you park a Sea Can or Semi trailer (in good condition, painted etc.) on the lot for that price so you can tuck away the mowers and such that you don't need right now.

I have a 45' trailer here with pallet racks all down one side, no I can't reach it with the forklift but man is it handy to be able to just put something away out of the way...

What is the zoning on the building you are renting? We have residential/agricultural here, no one say anything...its commercial zoned. The guy seemed "OK" with the idea of clearing some of the woods behind it to store mulch & material. If I can store mulch I'll see if I can buy a 40' can to make the backside of a materials bin and be able to store off-season stuff in that.