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Lease or Own? Pros and Cons

Joe Marconi

By Joe Marconi
in Running The Shop

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Jerrys Auto Center Apprentice

Jerrys Auto Center

Posted
Posted

“The moneys in the dirt!”… A comment that been made to me numerous times… And Yes it is!!

I purchased my property 1998… 

1) Certain months when I couldn’t afford to pay ME rent… I didn’t throw ME out!

2) My commercial property is my main and largest  retirement asset, I’m 66 now.

3) I did, what I did, when I wanted to with the property. 

4) In the 22+ years MY repair shop has paid ME just about $1.5M in rental income. MY Used car lot has paid ME just about $1M in rental income. 

To me…

The moneys definitely in the dirt!! 

  • Like 2
NATURE Contributor

NATURE

Posted
Posted

When I looked around for shops, the typical lease payment was $3000.00 a month.  My mortgage payment is $3000.00 a month.

  • Like 2
NATURE Contributor

NATURE

Posted
Posted
  On 7/14/2022 at 1:37 AM, xrac said:

That is dirt cheap!

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I got lucky and purchased the property in March of 2019, right before the craziness.  After down payment, the loan amount was right around $350,000 for a 20 year.  It's just a 3 bay shop but it used to be a used car lot, so plenty of parking and one of the best locations in the city.  Of course when going this route you have to take taxes and down payment($30,000) into consideration, so I have to add another $700.00 in property tax a month to that $3000 mortgage payment but still it was an easy decision.

  • Like 2
TheTrustedMechanic Community Regular

TheTrustedMechanic

Posted
Posted

I regrettably still rent but with a fantastic landlord.  Property in my area has always been crazy expensive and unless I want to move across town and out of town, there is nothing that is zoned industrial (required for auto repair where I am).  With that said, I am always wanting to buy because of the dozen or so repair shops that have gone up for sale over the last 20 years, I know of only two that actually sold and both had property.  The rest were buying a job basically where they had no property, just the business, equipment and customer database.  So, I know I own a job, not a business and I know that my retirement is not very secure, but it is what it is because of where I am.  But it makes me a good living and I guess I will make the best of it and try to position myself for purchase should something come up.

But, buy is the only way to go after you are established.  When you're starting out, renting is probably the best/cheapest way to go. 

  • Like 2
TheTrustedMechanic Community Regular

TheTrustedMechanic

Posted
Posted

I am located in a building that houses 5, soon to be 4 other businesses and my landlord bought the building about 4 years ago to base their two businesses in, so buying the building will not likely be available for purchase.  I am located in Traverse City, MI.  My rent for a 2000 sq. ft. space is only $1058/mo. so any purchase will be far more expensive on a monthly basis but still my desire.

 

 

  • Like 1
Jerrys Auto Center Apprentice

Jerrys Auto Center

Posted
Posted

Bottom line is there has to be some kind of long term financial plan/ goal/ exit/ retirement strategy in place….
With some kinda safety/ secondary plan in place because there is no guarantee of anything anymore! Just my take on the world today. 🤷‍♂️

  • Like 1

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      The Toolbox is Last to Leave, First is the Heart
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      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.

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