Should You Buy or Rent a Shop?
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- Опубликовано: 28 сен 2024
- I have a unique perspective on this question as I was a landlord for 8 years. In fact I used to own the building my original shop was in. I know what it’s like to own commercial property as well as rent it. In this video I talk about the pros and cos of owning vs renting your shop space.
Here is a link to the video that got this conversation started.
I’m Losing My Shop: • I’m Losing My Shop
Thanks for watching!
#ETCG1Video #ETCGShop
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Honestly, judging by your previous video, clearly buying looks like the best option.
Best thing about this video; being mindfull about your daughter and the importance to stay put for the time being.
That, Eric, amongst other things tells a lot about you.
My parents moved around like gypsies. I'm 52 and still stew about. My son graduated high school with a few of the kids he attended first grade with. That was of the utmost importance to me. They will appreciate it in the end.
That's beta male mindset
A real man who makes his interest in the lead.
Otherwise he will be stupid and naive i bit his daughter will never care about it
@@waheedali2429 Literally nobody should listen to an imbecile like you. That sort of mindset is a mindset brought to you by archaic places like the Middle East, where most of the "alpha males" still live in mudhuts and the countries are ripe with Medieval beliefs. Maybe get into this century.
A wise man thinks of the greater good for everyone, not just himself. Clearly this has worked out for Eric, as he owns a successful business, a RUclips channel and is still able to provide a loving and nurturing environment for everyone else around him. Eric is definitely not hurting and that is abundantly clear for not only himself but his family.
Delete your pigheaded comment.
This has affected a lot of parents decision making processes. Amazing how that works..
You do anything (or sacrifice) for your kids. They come first, always.
Buy (not this one of course).
Caveat: I guess my perspective is that despite all the problems it can be a good store of value. You ain't gonna live forever. Something left over for the kids once you pass is kinda nice.
Choose wisely, what you would think is nice to leave for the kids may be a burden to them.
We all love the honesty and integrity of your channel Eric. You are good dude my friend. You and your family deserve all the best. 🙏
Thank you.
Great points on why you didn’t buy the property Eric! So many things to consider when making the decision. I hope things go smoothly during the move!
I had a machine shop. I'm retired now. What I always tried to do is buy at least twice as much space and lease out half of it. Just my 2 cents.
Damn right! Bought a brand new duplex. Tenant (only 1) made every payment (and then some)
Paid it off 15 years. Hell .... I even tapped into tenant's heat & air vents.
I'm just glad you are upsizing. You are a savvy businessman Eric! Looking forward to many years of watching your success.
In my opinion, renting or owning depends. There are pros and cons to them both and should be taken into consideration.
Yep, depends on the situation.
@Jimmy Hunt everyone who rents out to and from people are renting rookies when they first start out.
Yes it does depend on a lot of things. The first one is ....do you have cash for a down payment to buy. Many business, especially newer ones, don't. But a lot depends on the property itself (potential existing environmental issues for example) or how long you may think you will stay there before outgrowing it as examples. Whether buying or renting, you are going to pay all the costs. Landlords don't lose money. But generally you are not on the hook for most major maintenance issues. Just call the landlord/management company. One potential big thing you might give up is the appreciation in value of the property....if you are in the right markets.
My favorite videos are when you were setting this shop up. Can't wait for the next one!!!
Could you do a video with tips on finding shop space for the DIYer who only needs 1000 sq ft or so?
Around me they have basically storage lockers you can rent and people work out of. All have electric, some gas and sewage. They are just smaller various sizes. 1/2 or so have tall ceilings like 16" (so some have part attics for storage). Run from $500ish -$1000ish month and you can legally work out of them. Buddy repairs motorcycles out of his, other person runs a glass shop and another two guys works on cars in thier own units. Many towns have these.
Eric you ar cool guy. i rember when you started youtube way back then. you helped me repair alotta cars just by looking at your videos. keep up the good works ma brudda. i wish great success.
Thank you!
Feels like every monday is my birthday.
Every month when mu=y V.A. check comes its my birthday...
Lucky u
My birthday is next Wednesday
Got to get up pretty early to catch ETCG by surprise.
Kudos to you for your foresight and good planning.
Well Done!
Never thought about all the problems of owning a commercial property. Thanks for the infos.
It really comes down to what will work for you both financially and time wise - ensure that you will have a shop for whatever period of time you plan on continuing to twist wrenches. Ownership helps control overall cost of use however it also brings with it all the things you mentioned in terms of accountabilities. Renting does limit your accountabilities, assuming you have the right lease and all requisite control features built in, however you'll be at the mercy of the landlord on a number of items including future lease costs and whether or not the landlord takes care of stuff that happens in a timely fashion. You could just as easily be displaced with a lease if the landlord doesn't take care of the property and fulfill the responsibilities of a responsible owner.
Seems like you have made up your mind, and that's good. You're looking ahead. Best advice, get a good attorney to make sure your new lease provides what you need.
For a RUclips shop (non traditional auto repair shop situation), the only way I would be interesting in owning my shop would be if I could find acreage in a rural location where I could have both my shop and my home. Otherwise, I would just rent. I know the nightmares of owning a home inside a town/city; I can only image the hell they would put a industrial business property owner through!
100%. But not on a dirt road.
What a great point of view!
Thanks so much for this.
I'm currently wrenching 8-5 at a dealer and renting a 2 bay shop for my hobby/side jobs during after hours and weekend.
WOW you have done your homework on what to do... you are super smart i am so very proud of you Mr. Eric... Another great video... i need to help you move out just say when...
i bought a dead factory, it was closed for 20 years, no buyer! i looed all details and knew it´s a good deal. lowerd the price cause contamination, which i threw in the trash can every week a litte and a wrecker carried for 100 bugs some quemicals.... no drama! keep cool! do it!
Hi Eric we miss you. Hoping things are working out. One of the greatest car guys .🔧🛠⚒👍
Many years ago, my dad had a problem with contaminated soil. He held onto a vacant building for 30 or 40 years until someone bought it for a song. My folks were very relieved that day.
Following my comments on the last video - the building across the street just sold. The new owners told the tenants they had until the end of the month to get out. After helping an old mechanic vacate a shop in a hurray he had been in for 45 years, if it is your life business then buy.
Very smart, Eric. Always research to find out what is best for your situation.
Eric you are so spot on !! My buddy was in your same boat "new owner wants space" 14 years ago the house next door from his home burnt down that landlord decided to pocket the money and not rebuild my friend bought the land had soil testing done and wow $$$ huge costs in clean up that being said present asking to move his business he has decided to build a shop next-door to his home getting it zoned commercial was his biggest hurdle now covid supply issues shop is 70% complete hope is Jan 30th he explained how his rent vs mortgage is dubble but he choose a 15 year mortgage didn't want 25-30 year's he is very nervous because if he fails he has to live next door to his failure ....
One thing to consider I am familiar with the area grew up all around there Warren County Clinton County and Adams and Brown county is also good possibilities some of those counties are not as strict on what you can and cannot do
Today really is my birthday, Eric. I give thanks for the digital confection which was gifted to me on the day of my birth. Many thanks, & Godspeed.
Happy Birthday!
Happy Birthday!
Im looking forward to seeing the new shop.
I've learned a lot from you over the years, not just about cars. I expect your new spot will work out great. Just some momentary growing pains.
I passed on a property because there was a very old school style shop on the grounds. I felt there was a decent chance that tenant would dump solvents in the back yard or down the septic tank drain.
In my neck of the woods, mine is the latest and largest of four shops to suddenly and unexpectedly lose their lease. And I had (I thought) an iron clad extension clause! So we have to move. Since there are really no good options for leasing another place anywhere within ten miles, we decided to build a new and bigger shop on a beautiful and well located property. Yes, we're paying top dollar. But the alternative is to shut down and walk away. In the end, our mortgage will be about what we are paying in lease and our monthly payment for the business. Fortunately, my landlord has granted us a one year lease which means we don't have to fight in court for 2-3 years. The lesson here is that in order to have control of your auto repair business you MUST own the property. A fifth shop (own by a former employee) is buying out his landlord because he too sees the writing on the wall.
Phase one and two inspections are needed prior to buying any commercial property. I have a client that I saved him from a major financial disaster.
Been on both sides myself. Went from leasing a shop to building a new shop and then sold it to an employee and built my current shop, then semi-retired. You should be hunting for the "dream property" now. Yes she is still in school, great but that's a year and she will be done. Find a nice place where you can build a nice home and build a shop there. Move the "stale" projects there and commute to shoot a few videos. Also depends on what you plan to do in that shop. If it's going to be a real working shop where you have customer cars daily or a "youtube shop" where you bring in a car, shoot a couple videos and then work on your own/family stuff normally to do videos. for the first one you don't really want it out in the sticks and next to your home, but for the other a nice shop that you can have a studio are in would be great.
For less stress, I would suggest you rent, only try to get as long a lease term as you can so the rent does not go way up.
It's always good to plan ahead, indeed. I hope you'll be able to realize your plans and future business develpments!
My friend rented a shop for 3 years, his lease said he was responsible for everything but the roof repairs, during that time he did spend some money on the building for repairs since it was old, now after 3 years he is thinking about buying it, but when the landlord had it appraised those repairs and improvements he made increased the value of the building quite a bit (and when compared to other commercial properties in the area that sold recently) so now instead of being reimbursed for the improvements he made he is being penalized so to speak, and has to pay the higher price if he wants to buy it. on the other hand there are no streams, flooding, road expansion, or contamination to worry about.
Great advice. You have a great positive attitude.
As you said, you have to do your research on it all, but IMHO it's far better to Own It. For instance, our mortgage payment on this place (2.5 acres, 2br house, 1100sf shop) on a 10yr note was half the cost of rent in town. So we where able to pay it off on the quick. Our property taxes here (for the year) are less than 1 months rent in town (house & shop). It all comes down to doing the research on it. Besides the ease of mind it gives you, to know that money is going somewhere in the endgame.
Good to see you're gonna be good through all this Eric. You had me worried when I seen that one, and it got me off my butt to finally put together my own (very crappy) vid on all this.
Every situation is different. My point was to do your research before diving in to be sure you know what you're getting into. Thanks for the comment.
@@ETCG1 Hats off to you for doing a Vid like this, precisely for that reason. LoL, to say what works here, doesn't work there, changes state to state, county to county, town to town. Too many variables to make a common easy Video for everyone.
If the asking price is within range of its historic value, you can get a good deal on a loan that can be paid in a reasonable amount of time, and it’s not economical to be beholden to lease contracts (ie. not many properties available with your needs), buy buy buy. _Always_ buy.
Not the right choice for every situation. My point is to do your research before committing. Thanks for the comment.
@@ETCG1 You are correct sir. To be honest, I was only halfway through your video and hadn’t factored environmental issues - which obviously anyone would be stupid to not research. I guess I’m mostly coming from a small town perspective, where I’d seen many many mechanics who owned their property, and you could tell how long they’d been in business for themselves at that location by how many beaters they had around the shop. None of those guys were/are moving anytime soon. 🙂
I was going to reply on the first video, if you did need extra muscle with the moving part, I live in Indiana so it wouldn't be a problem for me to have an excuse to take a vacation over to Ohio and help ya out, it's the least I could do for you helping me out a boat load with all your videos 🤙😉
Super comment.
Eric I would rent as it is not cheap to buy property and all the headaches I have had my fair share of problems with the place I am renting so clad that am renting I am from South Africa
Super happy for you Eric!
It definitely depends on your market, if your not over paying do it but rent is not always a bad thing.
I had a similar experience, I do mechanical restoration of collector vehicles. The property my shop was originally on was sold without offering it to several other businesses that could afford to purchase, and I would not be anything but an asset to their businesses. This was done not once, but three times in three years. I went off to find another property to relocate my shop too. long story short, I moved to a property, then found the owner told me everything was maintenance even though most things were at least 35 years old, such as the overhead springs on the rollup garage type doors. They were not new when I rented the property, so now I am looking for a property to buy and move to. There does not appear to be any commercial locations available right now. So instead of renewing a lease I requested a month to month till I can find a place to relocate to. They have been accommodating to my request for same. Sound familiar? I have been in business since 1989. The key word is due diligence!
I'm still in my (latelate) 20s, but I hope one day I can manage major life changes and challenges as well you seem to have.
I feel like it depends on situation . If you have the option to buy land that’s better . Renting isn’t bad depending on terms . But if your spending money it’s best to own properties renting long term is a loss of money only good for the landlord or owner of the property .
For long term, I would definitely look at buying a commerical property that you own. That way you won't have to worry about being forced move your business out again since the owner can do what ever they want with in a split second.
Did you miss the part in the video where I mentioned the EPA? They can shut you down in a heartbeat. If the town decides to rezone your property, you won't be able to do business there anymore. If you don't pay your taxes, they will also kick you out. Ownership is really just a myth we tell ourselves, you pay no matter what. At least with renting, you know how much you're paying and for how long. Thanks for the comment.
I would think as a business owner and running a business renting would be the better option by what you said on only worrying about what is on the lease. But if I want a personal shop that isn't doing any business out of I would probably try to buy a chunk of land an build my own shop on it. But yeah land tax is a thing and crazy and a tad bs sometimes, mum owns a few properties(6-7) and her land tax a year is like $40-$50K or something crazy like that.
You pay the property taxes either directly if you own the property, or indirectly if you rent.
Great to hear you're going to a better situation! Been watching you for years. :)
My Birthday is on a Monday this year!!!! WOO HOOO
Another downside to country living is the possible lack of auto parts stores willing to deliver to your shop, or if there are, there is less likely to be competition so prices may be higher.
Just started: If one can afford to buy a quality building at a fair price it is worth it although location is very important.
Agree. Just make sure you know the history of the site and what is under that building. Appreciation in property value cannot be over looked if you are in an overall good market and have a good location.
@@willb3018 👍👍
It depends on what part of the country and state you are in. Most commercial properties only do triple net leases where the tenant pays all cost for everything. You pay rent. You pay the property taxes. You pay all maintenance and repairs. The landlord will see to it the maintenance and repairs are done and the tenant will get a bill for it. So if you're in an area where commercial property has NNN leases, then you're always better off buying the property if you can afford to do it.
The EPA will definitely stick it to a business. As I understand it, the first year they existed, they made more money than the IRS ... they have been around a while now, I wonder where that money goes?
A little sewage never hurt anyone
With the building being that close to the creek and it having flooded previously, that's probably why the city doesn't want development. It would also be nearly impossible to get flood insurance on new development, probably.
I worked at a shop that used to be a gas station. It was a rental and the person who owned it owned the whole end of the block. Probably about 30,000sqft, compared to 10,000sqft the shop sat on. The owners of the shop had a non-binding agreement to buy it based on the results of environmental testing. Anyway, the ground turned out to be contaminated and nobody really knows how far remediation has to go until the get there or a much larger assessment is done, so the deal was scrapped. The building has since been torn down, along with the building on the other lot and they are for sale. They're on a busy corner and nobody will ever buy the land because of the soil contamination.
Talk to your tax accountant before buying, if you have a business, rent is fully deductible, but it you purchase the building, the cost has to be depreciated over a 39 years. A good tax accountant can help you make fiscally sound decisions.
I started my legit shop in December 2019 and had the chance to buy the building in the summer of 2020 the deal ended up falling apart and not because of me. I actually kinda like renting because I don’t have the responsibility’s and to top it off if I want to leave to go to a new shop because I out grew this shop then I have to sell my shop or lease it. If I were you and wasn’t open to the public I would want to put a building on my property so I didn’t have to pay rent but it’s not just as easy as that.
My birthday finally comes on a Monday when ETCG1 videos come out and this week he doesn't put one out 😡😡😡 I want MY digital cake dammit.
buy a shop and rent part of it out(not the whole thing) so you can both use it, and it kind of pays for itself.
Unless the tenant you get doesn't pay their rent, or they do something to damage the property, or they steal your stuff. Renting to people isn't all it's cracked up to be, trust me on this.
I found that leasing worked best for my business. When the economy collapsed in 2008 our business dropped off significantly. We were able to condense our business and move to a smaller cheaper building in order to survive. Flexibility is survival.
I'm all for buying over renting. But with those problems. I would rent and stay looking to buy something better
well stated! thanks Eric the car guy!!!
I didn't realize you were right up the street from me.
Thanks for talking about this. Don't give up on the idea of a shop out in the sticks ... you may find it easier, not harder, to get it done and that includes utilities. Also, if she's a Junior it's not as if graduation (and the school district issue) is very far away, right?
But I am curious about the deposit that just sat there waiting to be used for some unknown future purpose. Is that a common thing? If the new building wasn't being built, how long would it be viable to just let them hold onto your deposit with no hope of being exercised?
I appreciate the insight.
I always say buying is better because then you dont have to worry about what your going through and if you need any help moving i can help you
That's not true. What if the government wants to build a road where your shop is? Or if a tornado comes and wipes the shop off the planet? Or a flood, or a wildfire? Or any number of things that not only would destroy the property, but also all the equipment inside. Ownership guarantees nothing other than everything is your fault. Thanks for the comment.
Rent and then start looking for the ideal place to purchase. That will give you the proper amount of time so you don’t jump into something you will regret. Good luck.
Eric Your a legitimate biz owner. Buy the building a cure equity and if you ever decide you can lease the building and still accrue equity. Nothing to lose but the dreaded property taxes.
Maybe watch the video before commenting.
Eric hates SUVs so much he lifted the Pilot out of shot (or he's fixing the rust on the rear bumper).
Great Planning Eric!
I’m 27 and just bought 4.5 acres acres to build my own 50x70 shop never renting again!!
Lots of good points Eric. Thanks!
I love you Eric.
Eric, First I will caveat this with I do not know what you want to do. But I do like the idea that you get out of the rat race and just build a large garage with an apartment above. Don't sell your house until all the kids are out of HS. But then build the house that you can live in until your kids have to change your diapers (few stairs that are required, elevator shaft in the design etc.). The problem with this is that you can/may (zoning) not put a sign on the window that says Eric's Garage. The flip side is renting does make you move every five years or so, but that way you can build back better. You might be getting to the point that you're where you want to be. I do like the country property because of the noise - just start recording and you are amazed at the noises (I still loved the birds in the old garage especially when you talked on the corner of the garage). I will also say the country living is not for everyone there are other people involved in this kind of decision (think Green Acres). Most places have electricity, internet, water (might be a well and this can be a problem in some parts of the country) also you can hire a professional (I know I burnt the fuse at both ends and it hurt to call someone to do drywall, had three things the needed to be done).
This is a no brainer…
Own it, consider it an investment. Why rent and make someone else rich. You can for sure afford your own place.
All the best!
If you can, buy, but if not, do what you gotta do.
Thank You Eric! 👍😄
It's a big toss up on renting versus owning. For a business owner starting out it's cheaper to rent to help keep costs down at the beginning but once you're established it may be a good investment for the business cause you wont moving every so many years which can sometimes cost you to lose clients. Owning property you can write off more items when it comes to tax time.
Yay it's my birthday today! After waiting years for my birthday to fall on a Monday, its finally come lol
Happy Birthday!
@@ETCG1 Thank you so much Eric, I'm sure everything will go well with the move. All the best ❤️ from the UK.
Off topic... Will you ever do any more project cars? Maybe updates of Dad's Truck, and the Ford?
Every successful shop owner I know ownes the land and the building. I don't know of any successful renters. Plus generally a mortgage is less than a monthly rental.
I suppose it's a good thing I don't own a shop. ruclips.net/video/LnukfAwX4M0/видео.html
Build a pole barn and cement the floor for car lift
Great video 👍
Lots of good info there, man. Thank you!
My experience with renting (apartment) from both individual owner and investment group tells me that the investment group is going to extort much more money out of you than "market value". That was always their comment when the rent would go up by 100 dollars a month on a one bedroom apartment. Moving is expensive and a real pain, but they did push me into buying a house. Owning is a lot more work, but I have control over what gets done, when it gets done, and how it gets done. I would think a business property is about the same. You have to do your homework on the property, but if you did it right, you are money ahead.
I don't like the thought of someone having the ability to uproot me. I'd rather own. I get what you're saying as far as renting. Like leasing a car, any headaches, bring it back to the dealership.
Even if you 'own' it, the government can still call imminent domain and kick you out. Not to mention what the EPA can do to you if they find an issue.
@@ETCG1 Possible, but rarely does that happen.
Speaking of contaminated ground, what if the property you are leaving is contaminated, and you are blamed for it after being there a few years?
Court battles/expenses?
According to one’s age, health, etc., might be best to purchase environmentally clean and APPRECIATING property.
Hmm, might be something to think about.
Buy if you can afford it. Best decision I ever made.
Property tax is one of my biggest pet peeves as you are having to pay taxes on what you have ALREADY paid taxes on.
Belive me the property taxes ARE part of the rent amount you are paying each month for rent. You just aren't sending it to the city yourself.
Eric build your own shop if you can is the best route, just my thoughts 🤔!
I addressed that in the video. Thank you for the comment.
Since we are talking shop space, how about talking about finding a shop space to work on your own projects as an individual and not a business? Lots of folks in the cities don’t have their own houses with garages, any advice to them?
Join a CO-OP that has a garage and tools. If you can't find one maybe you would start one.
most shop owners (and i'm one of them) don't see the bigger picture. EPA can be an issue, no doubt on older properties but those issues are addressed at the time of purchase. it's a deep subject but it can be done where if a property is heavily polluted a "benchmark" reading if you will is taken and as long as it doesn't get worse under your ownership you're ok (usually)
anyway, most shop owners tend to think "when i retire i'll sell the biz" and that is easier said than done. who wants to buy your clapped out usually out of date equipment? no one. and if said owner was not investing elsewhere and didn't own the building there is really no nest egg to speak of and lets be real, 1/2 your stuff will end up at a flea market, the other 1/2 in a dumpster and no one really wants your 'black book' of clients so there is no value in your business. basically, running the business was the most expensive job you ever had and there is not much ROI on it
that said, owning your own building that you've maintained means you have a tangible asset you can sell or rent. 2k+/mo for a commercial space is pretty dam good imho or the lump sum of a sale. to your point, being a renter is like being an employee that drops their timecard in the clock at 5 and says 'not my problem' so it's a total risk/reward deal. i see renting ok to get your feet wet but in the end ownership is better long term in my book.
take the complex you're moving to. those buildings are 'cheap' to build, say 1m for easy math and configurable rental spaces in terms of square footage. lets say that 1
m building has 10 slots getting 2k/mo so 20k/mo or 240k/year. in 5 years that place is paid for all on the backs of renters. commercial real estate is where it's at....not renting to families. sad reality is renting to a family/residential renting is more of a pain to get rid of a deadbeat. commercial....they can have you out in a few days.
Always buy. It's an investment. Property always increases in value
Sounds like you saved yourself A lot of grief !!!
Great information 👍🏾
Buying - period - in a certain location - not easy
GREAT Advice
Best of luck!
I know what Eric means about not really owning a property. I 'own' my house outright, it is paid off. However if I didn't pay the property taxes it would eventually be taken away from me. So if it can be taken away from me it means it's not mine. So I am renting it from the state. Breaking down my property taxes by month I am paying the state $741 a month. And when I need a new roof or furnace or leak repair my 'landlord' has no responsibility, it all comes out of my pocket.
Yep.
It is yours. The state doesn't own it and can't pick the paint color or who lives there. You're not paying property taxes as a form of rent. You're paying property taxes to pay for the fire department in case it's on fire or the police department in case someone broke in, the road to get there and the sewer to take away the waste. And, yeah, some of it goes towards schools since we live in a somewhat advanced civilization and not Afghanistan. Not saying it is perfect or there isn't any waste and corruption, but it is the price we pay to live in relative peace and prosperity in the US.
Glad I watched this
Lots of pros to owning...lots of cons to renting and vice versa. Not all property is in a bad location and in disrepair. Looks like your landlord is a lot behind with routine maintenance and paint etc. and favors to use all of the rent money for himself vs. put some of it back into the property to keep it worth the rent. Own ing also comes with appreciation so after 10 or 20 years, you not only paid all of those property taxes etc but you can rent it out for a retirement income or sell it and take the possible $500,000+ of appreciation with you.