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Old 02-13-2006, 08:33 AM   #1 (permalink)
 
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Unhappy HELP! Dream or Nightmare?

Hello everyone. I'm new -- long time spyer, first time poster.

I need advise from all you experts. I've already started one business out of my home as a licensed nail tech with established clientele. Now, I'm looking to expand into tanning and nails and move the biz out of my home and into a storefront in town.

I bought out a rather new tanning salon (very reasonable) so I'd be starting with their equipment 2003 models -- which is (4) Solaris 175 Speed Beds - 32 bulbs with 3 face tanners on each, along with (1) 48 bulb Sundome Standup. Five beds total. I would also be hiring more nail techs and have 2 or 3 nail stations set up.

The spot I found in town is an ideal location -- on the corner and very visible. It use to house a hair and tanning salon so it's equipped with adequate power, ac, handicap accessable, etc....

The main floor is 1300 sq. ft and it also has a loft (perfect for my office), and a lower level that is an additional 1300 sq. ft (great for adding more beds and expansion in the future) -- the lower level is allready built out for beds with 4 rooms.

To rent or own? Or rent to own? That is my question.

Rent is very reasonable in my mind -- $500/mth and he agreed to a 90 day buildout period --
OR owner will sell the building for $85,000

Now, renting gives me time to get my feet wet and taxes and building insurance will be covered by the landlord along with any structural problems within that time period (like the roof).

But -- This building as I mentioned above is on a corner and the whole side wall of the building serves as a HUGE billboard and welcomes people into our town. Right now the wall is rented out to one of our local banks for $300/mth and they've signed a 2 year lease for advertising on that wall. The owner informed us that another bank in town offered him double that and wants to lease when the other one is up.

So, that brings in at least $300/mth with the potential of making $600 or more a month (we thought it would bring in more if we divided the wall into 4 and sold for spots for $200/mth each? Just a thought)

Anyway, in addition, above the storefront is a very nice 3 bedroom apartment that would be ready to rent out with very little work. It could bring in an easy $500-$600 per month as it has it's own free laundry included.

What would you do? Could somebody help me with my numbers and estimated profit for the first year with the 5 beds and 2 nail techs? Here's my info:

$20,000 - $25,000 into the investment once I have everything ready to open
Utilities for salon alone (not entire building) around $1000/mth
Payroll around $2,000/mth
Advertising around $500/mth (I figured less because of high visibility)
Insurance for Salon -- ???
Competition is another salon within 3 miles with 8 junkie beds, they also do hair and may get a nail tech -- but they have a rep for being BITC_Y (can I say that on here?)

I haven't signed anything yet so I need help -- also, if you have suggestions on things to include on the lease in writing? Thanks soooo much!

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Old 02-13-2006, 08:39 AM   #2 (permalink)
 
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Re: HELP! Dream or Nightmare?

$500 a month?? I wish!
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Old 02-13-2006, 08:51 AM   #3 (permalink)
 
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Re: HELP! Dream or Nightmare?

Neon,

Will I be making enough profit with only 5 beds within the year to support my expenses? I don't want to count on nail profits -- I want to make sure this will fly on tanning alone and any nail profit will be bonus. Nails will also help in the slow season. Thoughts?
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Old 02-13-2006, 08:53 AM   #4 (permalink)
 
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Re: HELP! Dream or Nightmare?

Hard to say, all depends on your local market.
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Old 02-13-2006, 09:00 AM   #5 (permalink)
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Re: HELP! Dream or Nightmare?

I would think if you have the space to add more beds, that would help build up more cash to pay the expenses. Money can be made with only 5 beds, but it could be tough to make the money you are hoping for, considering you have another salon located so close with more beds.

Last edited by tnannie; 02-13-2006 at 10:20 AM.
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Old 02-13-2006, 10:17 AM   #6 (permalink)
 
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Re: HELP! Dream or Nightmare?

Based on what you've stated, this sound like a very nice deal. JMO, I'd lease to own and add to the agreement that you can purchase at a fixed price anytime during the lease period. Why is the landlord selling????? Make sure you research the property first and there is nothing hiding like the town is getting ready to condemn the property.
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Old 02-13-2006, 10:22 AM   #7 (permalink)
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Re: HELP! Dream or Nightmare?

I agree ^^ Why is the owner selling?
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Old 02-13-2006, 10:27 AM   #8 (permalink)
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Re: HELP! Dream or Nightmare?

I agree Clubby. The price of the building sounds like a great deal. The building has room for expanding and sounds like getting up and running would be fairly easy going. The renting with an option to buy would be a real good idea I think too. My only concerns would be how many beds they plan to open with. Not impossible, just would be more profitable IMO if there were a few more beds to keep competitive.
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Old 02-13-2006, 10:41 AM   #9 (permalink)
 
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Re: HELP! Dream or Nightmare?

The building had been owned by a lady who just recently passed away due to old age. The apartment was her home and the building had been paid in full for quite some time -- she owed nothing on it and the income from the side wall was all she needed to pay the insurance and taxes on the building annually. For the past two years she didn't even rent out the storefront for extra income. When the last salon moved out, she just kept it vacant because she didn't want the hassle.

Since she passed away -- her daughter was given this building which is now just sitting there and has been for two years unoccupied. They never listed it with an agency to sell it , but they just put in a "for sale by owner" sign in the window. This daughter and her husband don't live in the area (in fact they had to drive 2+ hours to come into town to show it to me). They would like to pass it on at this point, but it's not costing them anything either to just hang on to it and take in $$ from the side wall. This is why I doubt they will come down on the price.

I believe it would be wise for us to rent to own -- they mentioned either a one year or a two year lease with option to buy.

I'm just nervous about the income potential -- would most of you recommend starting with more than 5 beds?

Please keep the advise coming -- I've gotta make a move rather quickly, thanks!
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Old 02-13-2006, 11:27 AM   #10 (permalink)
 
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Re: HELP! Dream or Nightmare?

I would do the lease option. Gives you time to see if this is really something you wanna be in for the long haul. Owning is a great write off as well as future investment (if the town is growing) Leasing also gives you the opportunity to see if there are potential (hidden) issues with the building
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