Tough decision to make

I

imported_turbomangt

New member
I work out of a shop that is part of a office/shop space. I rent the shop and the landlord rents out the office. The tennant moved out of the office 3 weeks ago and the landlord is having a tough time just renting the office space. He told me if he can't rent the office he may be forces to sell the unit (which goes for $175,000)he would give me first option to to buy if it comes to that. I don't want to move, and I don't want to invest big money either. I have the shop set up just as I want it, and finding a unit similiar around me would be difficult. I pay $700 a month, the entire unit office and shop goes for $1300. That is a big nut to crack when you add up utilities, taxes and such. This is a tough situation, I'm trying to help him find a tennant as well, but renting office space is tough. Gary
 
If you can afford the down payment I would buy it. If my numbers are right you would only be paying $44 more per month and then you could still rent the front. PLUS most of that $744 would be equity for you.



James
 
$175,000 borrowed for 30 years @ 6.5% = $1,106/month

Of that, about $950 is interest early on in the loan, the balance principal.



Now add taxes & insurance, whatever they may be in Chicago, and maintenance & utilities. Let's say $300/month.



So, $1,300-1,400 appears to be about right to cover costs.
 
JamesLA said:
$175,000 borrowed for 30 years @ 6.5% = $1,106/month

Of that, about $950 is interest early on in the loan, the balance principal.



Now add taxes & insurance, whatever they may be in Chicago, and maintenance & utilities. Let's say $300/month.



So, $1,300-1,400 appears to be about right to cover costs.
Click to expand...





Your forgetting the down payment which would be about 25%.



James
 
Flexin said:
Your forgetting the down payment which would be about 25%.
Click to expand...



Depends on the lending arrangement, but even then it's a wash. By investing $44,000 of his own cash, he would forgo any other investment returns on those funds. Capital is never free.
 
Sounds like a good investment , make him and offer on the place. You could either rent out the office space or setup a store to sell detailing supplies. Good luck either way Gary



Regards

Jerry
 
Some random thoughts....



1. Do you know anyone who might have a use for the office space?



1A. Is there someone you could partner with, who could occupy the office space, and boost both your businesses?



2. Can you make some use of the office space to generate additional revenue?



3. What about leaving -- this is a good time to review your goals and business plan. Maybe now is a time to move to a more attractive, larger, or cheaper location to improve your bottom line.
 
Without knowing exactly what the place is like in terms of location, traffic, and community demographics, it is hard to say what you should do. I know that a friend of mine for whom I used to work was paying $600 a month for a small shop with a poor location, and he got an offer to buy an even bigger business in a neighboring town. It has a 2 bay garage connected to a showroom and then connected to an office the same size as the garage, plus a large parking lot and a basement as big as the entire upstairs that serves as the wash bay. It is in a great location (a lot of traffic, and the traffic is usually heading towards a string of rich towns) and he got all of the leftover chemicals and equipment as well. Long story short, he utilizes all of the space on his own (no sublets) without even selling chemicals, but he does very well. He doesn't own the building, but my point is that he kept his old shop too which means he's paying more than you would be when you factor his enormous rent from the new shop, plus the old shop, and all of the utlities and taxes associated with each.



If you can find a way to boost your own business to cover the costs, go for it.
 
You must log in or register to reply here.
Back
Top