Multi Shop Locations! Expansion? Start Up? Aquisition? Challenges? Advantages?

[mspecperformance]

Hey ASO community! I wanted to get a conversation started about multi shop ownership.

 

How many of you guys out there are multi shop owners?

What prompted you to expand to more locations?

Do you have partners?

Were they branded the same or do you fly your shops under different banners?

Did you take over existing shops or build them from the start up?

What avenues did you use for financing? Cash on hand? Bank? Investors?

Did you purchase the property too?

What do you believe your competitive advantages were?

What do you believe your competitive challenges were?

Greatest Advantage?

Greatest Challenge?

Any pitfalls you experienced?

What carried over from your first location?

 

 

I hope we can get some good feedback from the brilliant ASO minds!

[ATLAuto]

Sounds like you are looking to expand. I'm in the same boat. We have several key neighborhoods picked out and are waiting for the next recession to buy. I know that sounds odd, but now is a terrible time to buy commercial real estate.

 

Looking forward to the rest of the responses.

[mspecperformance]

I am entertaining the idea. In my market, purchasing property is daunting so leasing is more of an option to get a business going.

[andresauto]

Hey ASO community! I wanted to get a conversation started about multi shop ownership.

 

How many of you guys out there are multi shop owners?

What prompted you to expand to more locations?

Do you have partners?

Were they branded the same or do you fly your shops under different banners?

Did you take over existing shops or build them from the start up?

What avenues did you use for financing? Cash on hand? Bank? Investors?

Did you purchase the property too?

What do you believe your competitive advantages were?

What do you believe your competitive challenges were?

Greatest Advantage?

Greatest Challenge?

Any pitfalls you experienced?

What carried over from your first location?

 

 

I hope we can get some good feedback from the brilliant ASO minds!

Answers are in exact order as asked.

 

I am.

 

Initially zeal, not insight.

 

No partners.

 

Different for now.

 

Took over existing shops and cleaned house to make sense of operations. Either way would have been fine with me.

 

Cash Down Payment and Mortgage.

 

Own properties.

 

Self-confidence. Believers and supporters. Know-how. Paying attention. Intention to be successful. Unreasonablness, not making excuses, taking full responsibility for all success and failure. Doing things that make sense, not doing what's popular. Communicating clearly and concisely. Being able to hold a position I believe in.

 

A market place trained by tricks and gimmicks. An illusioned market place.

 

Supportive spouse that believes in me and allows me to make mistakes without ridicule or regrets and constantly pushes me toward improvement. People that hold my vision when I'm tired, burned out, or practically dead!

 

A tainted and rising scale drug induced society that perpetuates what they see on TV instead of reaching toward the stars to better themselves and mankind. A society where apparencies trump actualities.

 

Bad advice. Lack of due diligence. Pitfalls are subjective. One man's pitfall is another man's stronghold.

 

Experience / Know-how;

Personal inherent unwillingness. Lack of know how.

 

A small business is an extension of its creator and management. If the creator and management is weak, so is the business. If the creator/manager is disorganized, so is the business. If the owner/manager is fiscally sound due to proper handling of income, so is the business.

 

Don't waste time with losers. Losers only know how to lose and want to tell you I told you so while they are killing your game.

 

Massive income comes from ethics, communication, sales, efficient well handled overhead, fully functional administrative lines. Everything that is in good good standing in the first location will have to be carried over to the next location. Anything and everything that is not handled, ignored, succumb too and avoided will be perpetually amplified to the subsequent locations and will become a greater monster to slay.

 

I will add and update this post, but in short and for now, this is my quick response.

 

I'm a business enthusiast and I am a continual and predictable success. There are many more people here that have built empires through willingness and know how. Hopefully they will chime in.

 

Additional thoughts:

 

I read a book called The Peter Principle about 10 years ago which stated how people hit the ceiling at their own level incompetence.

For some people that can be owning one business, for others it may be 100. Know-how is attainable as long as one is willing.

[HarrytheCarGeek]

How many of you guys out there are multi shop owners?

I am one.

 

 

What prompted you to expand to more locations?

Greed, stupidity.

 

 

Do you have partners?

Yes.

 

Were they branded the same or do you fly your shops under different banners?

Both, some are the same franchise, other are held under different brands.

 

Did you take over existing shops or build them from the start up?

Both.

 

 

What avenues did you use for financing? Cash on hand? Bank? Investors?

Own savings, personal loans, owner financing, structured financing, investors, partners, banks loans.

 

 

 

Did you purchase the property too?

Yes. Primary goal is always to control the real property.

 

 

What do you believe your competitive advantages were?

Disciplined: Ambition, curiosity, drive, optimism, greed, desire to serve.

 

What do you believe your competitive challenges were?

Overcoming: Greed, ignorance, overly optimistic, naive, incompetence, stupidity.

 

 

Greatest Advantage?

Faith, desire to learn, humility.

 

 

Greatest Challenge?

Overcoming self arrogance. Educating customers. Presenting value.

 

Any pitfalls you experienced?

Theft, unfaithful partners, gov. overregulation, incompetent employees, financial predators, fraudalent claims, parasitic lawyers, corrupt courts, losers, time sinks, stupid people, evil or maglinant people, etc.

 

What carried over from your first location?

Customer service and production processes.

[andresauto]

How many of you guys out there are multi shop owners?

I am one.

 

 

 

What prompted you to expand to more locations?

Greed, stupidity.

 

 

 

Do you have partners?

Yes.

 

 

Were they branded the same or do you fly your shops under different banners?

Both, some are the same franchise, other are held under different brands.

 

 

Did you take over existing shops or build them from the start up?

Both.

 

 

 

What avenues did you use for financing? Cash on hand? Bank? Investors?

Own savings, personal loans, owner financing, structured financing, investors, partners, banks loans.

 

 

 

 

Did you purchase the property too?

Yes. Primary goal is always to control the real property.

 

 

 

What do you believe your competitive advantages were?

Disciplined: Ambition, curiosity, drive, optimism, greed, desire to serve.

 

 

What do you believe your competitive challenges were?

Overcoming: Greed, ignorance, overly optimistic, naive, incompetence, stupidity.

 

 

 

Greatest Advantage?

Faith, desire to learn, humility.

 

 

 

Greatest Challenge?

Overcoming self arrogance. Educating customers. Presenting value.

 

 

Any pitfalls you experienced?

Theft, unfaithful partners, gov. overregulation, incompetent employees, financial predators, fraudalent claims, parasitic lawyers, corrupt courts, losers, time sinks, stupid people, evil or maglinant people, etc.

 

 

 

What carried over from your first location?

Customer service and production processes.

Just living the good life!

[mspecperformance]

Thanks guys for the great responses. I was actually hoping to get a response from Andre so thanks for that!

 

Andre, did you look directly at applying for and using SBA backed loans when you were looking into purchasing your next locations? Any advice on applying for these loans?

[ATLAuto]

I cannot answer for Andre, but we opened using an SBA loan. Shoot me a pm, and I'll walk you through the process.

[andresauto]

I looked at the SBA route and it is a viable route. I did not use that route though thus far. I fundraised 2 of my down payments through customers. The third was no down payment and 100% financed.

 

How I did it. For down payments initially I asked people with money for money.

 

People with money will help you if they believe in you. You have to sell yourself! Not as a con, but as a professional.

 

The first property I purchased which was being rented was being sold out from under me after 10 years of hard work there. I called the landlord to ask what was happening since there were inspectors and engineers at the shop and he told me he's selling the building. Apparently he offered it to me first 3 years prior and $200,000 less than what I finally paid for it but I was unaware of that proposal. Someone did not deliver the message intentionally. That guy was terminated immediately. By not knowing and not replying, the landlord thought there was no interest from my part and offered it to a neighbor who agreed to purchase it for $125,000 cash down payment and would mortgage the rest.

 

I explained to the landlord that I have been there for 10 years and this place is my hopes and dreams for my future and my families future.

 

The landlord said if I come up with $125,000 within 48 hours he will sell it to me instead, otherwise it's sold. Later that same night my customers, husband and wife, came in to pick up their car and I was like a deer in headlights to say the least with the craziness of my day. They knew me for 8 years at that point and saw how hard I worked day and night driving by the shop, going to work and coming home and seeing me there lights on and working. I explained to them what was happening at the shop. I told them the whole story.

 

Never, ever, ever in my wildest imagination did I ever expect them to say come by tomorrow and we will loan you the cash. I did not ask, it was offered. Within 24 hours I had the cash in hand. What I did have to ask for is the owner to hold the mortgage on the property which he was willing to do for me. I paid them back through equity within 6 months. My overhead for that first place was $10,000 a month. It was scary.

 

For the second shop I had to fundraise the money which I did successfully, another customer and once again the mortgage was held by the owner.

 

For the third shop I convinced the owner it was in his best interest to sell to me with no down payment and he holds the note because he had an absolute mess. The place looked like a bombed out village. There is no way I could believe that anyone in their right mind would want to buy this place. Even with no down payment and 0 percent interest which I found out at closing was not aloud I overpaid and if I had to do it over again I would not agree to the amount of money, though I paid no down payment and no interest and it was owner financed with minimal closing costs.

 

Yesterday I raised another $60,000 from my father in law to make another purchase. Believe it or not he was the hardest sell.

 

It occurred to me that in order to raise money or borrow money people must believe in you, and must be willing to help, it's not just about credit or appearance or sweet talking. It's about a well expressed purpose with a concisely expressed plan, that is easily understandable.

 

SBA is a 4, 5, 6,etc backup for me because I have the ability to utilize SBA funds for each corporation I own.

 

My way is not conventional but that's how I did it mainly because I didn't know any better. All I truly needed to know is that it would work.

 

Extra Input:

 

There is a 9600 square foot location available in Middle Village that I saw on loopnet. It is classed industrial and may be workable for you. Check the zoning. 4800 square feet main floor with a 4800 sq foot cellar. No price listed.

[andresauto]

I am entertaining the idea. In my market, purchasing property is daunting so leasing is more of an option to get a business going.

The first property is always daunting, don't let that paralyze you from making a move. My first closing I was trembling at the table after signing a 3/4 million dollar deal. It was a surreal experience. It was also one of the most memorable most exciting moments of my life.

 

What made it so scary was my lack of preperation and know-how. I was in my twenties, had a hard work ethic but a low level of responsibility or willingness to confront finances or anything administrative. My solution to every problem was longer hours, harder working and more profits through physical labor. It kept us alive but did not nurture growth or rapidity of growth. That was the scariest part. Complacency.

 

The first thing you need to have is a financial plan. Income intelligently predicted and a breakdown of every single expense in a weekly format. Include a make believe mortgage payment. Make sure you break expenses down weekly. That way you will know per week what you need to make to break even. Make sure you add in a paycheck for yourself as well. Add a reserve account of at least 5% to start on your financial plan.

 

For the mortgage payment predict what you believe it will cost you to purchase the building and property. Over inflate that number by $200,000 as a margin of error. It's not overestimating, it can only be to stupidly underestimated. Calculate the mortgage at a 10% interest rate. Remember, estimate high. You will have a good picture of what you will need to minimally produce. Then arrange the shop to produce it and buy your building.

 

DO NOT WAIT FOR THE ECONOMY TO CRASH! Create your environment to support your endeavor. The chances of your environment fixing itself to support you has NEVER been my experience. My whole push has been through hell and high water, stupid mistakes, overpaying, getting ripped off, a mutiny where I had to close 2 shops simultaneously and start anew. THERE IS NO PERFECT TIME! You make it perfect by becoming more able and solving the problems and craziness you run into.

 

Below is an attachment of a quick write-up I did for someone on a picnic table at a family outing. If I'm missing anything just add it in. He was a mechanic working at a shop and he was fed up and wanted to go off on his own. He bought a building in New Jersey and went in for the win. Oh yeah, his wife was trying to talk him out of it. She wanted him to get a secure 9-5. She vehemently protested. He pushed forth.

 

 

 

[mspecperformance]

Andre, thank you so much for your posts they are very enlightening and a great insight to a real process!

 

Question - what was the process that you took to finance after the down payment? I am largely unfamiliar with commercial mortgages and loans for property. Other than downpayment Credit score and proof of income is the largest factor for private property mortgage qualification but I am told commercial property process is completely different.

[andresauto]

All my deals were made through kindness, communication and fairly simple agreements of what I am willing to pay and what the seller is willing to accept. All other purchasing agreements are generic according to property purchasing procedures and legal jargon of contracts.

 

The first step I take is pinpoint a property. I would look for one initially fairly close by. I would look for an unoccupied piece that is not on the market yet. I would go to public records and get the property owner information.

 

DO NOT COMMUNICATE THROUGH A VIA! Brokers are necessary sometimes, I've never used one. Whatever you do never talk to tenants of a property, they will lie and dissuade you from purchasing for obvious reasons.

 

The owner is the owner and the decision maker. You need to establish a relationship with the owner or owners. Anyone else is a pawn and you are wasting your time.

 

Sometimes people need to sell but are not aware of it.

 

I am owner financed across the board. Alot of business/property owners are willing to finance you after the down payment because it's a consistent predictable income that pays them both principle and interest and saves them a ton of cash from income taxes. It's dependant on the person. I'm a 3 time winner of that process. And it's been a win,win for everyone.

 

You have to be willing to ask. One guy did not want to finance me, it took me about 2 to 3 years, before he saw the light. It should not take that long, I was not focused or sold enough on the deal. You have to show the other person the benefits and value of your offering.

[mspecperformance]

All my deals were made through kindness, communication and fairly simple agreements of what I am willing to pay and what the seller is willing to accept. All other purchasing agreements are generic according to property purchasing procedures and legal jargon of contracts.

 

The first step I take is pinpoint a property. I would look for one initially fairly close by. I would look for an unoccupied piece that is not on the market yet. I would go to public records and get the property owner information.

 

DO NOT COMMUNICATE THROUGH A VIA! Brokers are necessary sometimes, I've never used one. Whatever you do never talk to tenants of a property, they will lie and dissuade you from purchasing for obvious reasons.

 

The owner is the owner and the decision maker. You need to establish a relationship with the owner or owners. Anyone else is a pawn and you are wasting your time.

 

Sometimes people need to sell but are not aware of it.

 

I am owner financed across the board. Alot of business/property owners are willing to finance you after the down payment because it's a consistent predictable income that pays them both principle and interest and saves them a ton of cash from income taxes. It's dependant on the person. I'm a 3 time winner of that process. And it's been a win,win for everyone.

 

You have to be willing to ask. One guy did not want to finance me, it took me about 2 to 3 years, before he saw the light. It should not take that long, I was not focused or sold enough on the deal. You have to show the other person the benefits and value of your offering.

 

 

Andre, is this owner financing a common practice? Are there resources you used in terms of explaining to an owner how this would work out legally? I would be interested in exploring this option and doing my own leg work and research in finding opportunities. I fully understand this is a bit more unorthodox and also reliant upon expressing the plan and confidence behind it. It is very intriguing.

[andresauto]

 

 

Andre, is this owner financing a common practice? Are there resources you used in terms of explaining to an owner how this would work out legally? I would be interested in exploring this option and doing my own leg work and research in finding opportunities. I fully understand this is a bit more unorthodox and also reliant upon expressing the plan and confidence behind it. It is very intriguing.

I feel that it is a common practice property and business wise, not necessarily residential since it is fairly easy to get a house mortgage.

 

Ask your tool guys if they no of anyone selling there business/property or are disgruntled with the business.

 

Start with unoccupied lots. Since they are a complete liability to the property owner.

 

Then inquire about people selling business/property through tool guys or local parts houses.

 

Then look into disgruntled, fed up business owners.

 

Then look at people who are close to retirement.

 

Your biggest market will be disgruntled and failing shop owners.

 

There have got to be others on here who have been owner financed.

 

It's all about communication.

[mspecperformance]

I feel that it is a common practice property and business wise, not necessarily residential since it is fairly easy to get a house mortgage.

 

Ask your tool guys if they no of anyone selling there business/property or are disgruntled with the business.

 

Start with unoccupied lots. Since they are a complete liability to the property owner.

 

Then inquire about people selling business/property through tool guys or local parts houses.

 

Then look into disgruntled, fed up business owners.

 

Then look at people who are close to retirement.

 

Your biggest market will be disgruntled and failing shop owners.

 

There have got to be others on here who have been owner financed.

 

It's all about communication.

 

 

Again I appreciate the responses Andre. They are very enlightening and encouraging.

 

One of my biggest hang ups about property in NYC is that it seems a lot of it is snatched up by developers or parties interested in purchasing property to build up. Not only is the competition very fierce but many property owners have it in mind to sell to developers hoping to get a bigger pay day opposed to someone who will be looking to use the existing building. I recognize these are self defeating excuses and there has to be opportunities out there. I will investigate further.

[andresauto]

 

 

Again I appreciate the responses Andre. They are very enlightening and encouraging.

 

One of my biggest hang ups about property in NYC is that it seems a lot of it is snatched up by developers or parties interested in purchasing property to build up. Not only is the competition very fierce but many property owners have it in mind to sell to developers hoping to get a bigger pay day opposed to someone who will be looking to use the existing building. I recognize these are self defeating excuses and there has to be opportunities out there. I will investigate further.

I'm not going to say I know your area, because I don't. But I understand the numbers, and I understand that if you can afford to rent there then the market is in your realm of affordability.

 

There is a big difference between what people want and what people are willing to pay for a property. I understand about development sites and so forth. In my educated assumption I will firmly state that you can minimally afford a million dollar building whether you believe that or not. I know it. And I'm usually correct at snap judgement financial decisions.

 

A real quick calculation would look like - what percentage of your net profits would your mortgage and property tax expenses occupy per month.

25% or less would be ideal but even if it went up to 80% you are taking money from one pocket and putting it in another.

 

Make sure you don't subtract current monthly rent from monthly gross profits to come up with your monthly net profit since you will have a mortgage to factor in instead.

 

A mortgage is definitely more pressure on you and more production needed than paying rent unless your rent is super expensive. Also remember your rent will go up but your mortgage will stay fixed. Property taxes obviously go up as well but that is reflected in your rent too. When you buy within 10 years you will see it was the smartest move you could have made. It is not immediate gratification financially but it is long term stability and financial appreciation.

[mspecperformance]

I'm not going to say I know your area, because I don't. But I understand the numbers, and I understand that if you can afford to rent there then the market is in your realm of affordability.

 

There is a big difference between what people want and what people are willing to pay for a property. I understand about development sites and so forth. In my educated assumption I will firmly state that you can minimally afford a million dollar building whether you believe that or not. I know it. And I'm usually correct at snap judgement financial decisions.

 

A real quick calculation would look like - what percentage of your net profits would your mortgage and property tax expenses occupy per month.

25% or less would be ideal but even if it went up to 80% you are taking money from one pocket and putting it in another.

 

Make sure you don't subtract current monthly rent from monthly gross profits to come up with your monthly net profit since you will have a mortgage to factor in instead.

 

A mortgage is definitely more pressure on you and more production needed than paying rent unless your rent is super expensive. Also remember your rent will go up but your mortgage will stay fixed. Property taxes obviously go up as well but that is reflected in your rent too. When you buy within 10 years you will see it was the smartest move you could have made. It is not immediate gratification financially but it is long term stability and financial appreciation.

 

 

I completely agree and when I finally do make the leap I'll probably want to take you out to a Peter Luger steak dinner for all the good advice!

 

I will look more heavily towards this direction. Originally I was looking at looking for a lease of space however I think you have open the doors wide open with a lot of different options. I'll keep everyone posted and ATL I'll contact you soon about the SBA process.

[alfredauto]

I bought the place I was renting, it was the best thing I've done for my business yet. I got a 10 year mortgage from my bank for the property, it wasn't that difficult. I put 30% down, and personally guaranteed the note. I met with the bank president, explained what I do and shared some alternative uses for the property and that was about it. 5.75% for 10 years fixed rate. I probably could have shopped around and saved a couple % but I like my bank and I know the people from doing business there for years. The drawback is rent is 100% tax deductible, the mortgage is not. Only the interest and taxes. My monthly payment is lower and my investments are making more than 6% so I hang on to the mortgage.

 

Renting was so much bullshit I couldn't take it. I had buyers coming in at night rummaging through my tools and inventory with the landlord as he had my shop for sale while I was leasing it. How many times do you have to tell someone "the equipment and inventory does not come with the building and is not for sale" before you punch them for touching it? I had first right of refusal so when he did find a buyer I had 30 days to get out or come up with money. Luckily it was a lowball offer that he took so i got a pretty good deal. It was a little stressful to say the least. What good is $50k worth of inventory with no shop? I wasn't about to put tires on in my barn or send them back and permanently piss off the wholesaler (assuming they would buy them back) but the thought was there. No need for regular haircuts any more I pulled it all out

[mspecperformance]

Andre, how have you approached these shop owners and how did you get the knowledge that they also owned the property?

[HarrytheCarGeek]

. The drawback is rent is 100% tax deductible, the mortgage is not. Only the interest and taxes. My monthly payment is lower and my investments are making more than 6% so I hang on to the mortgage.

 

You have the property depreciation deduction.... big advantage there when you own.

[andresauto]

Andre, how have you approached these shop owners and how did you get the knowledge that they also owned the property?

Find a property.

 

Get address, street, city, zip code.

 

Fill out a Freedom Of Information Law and submit application at appropriate county/town offices and pull public record of property and ownership.

 

Get owner info. Phone numbers may be outdated so you'll have to do a payed online search of the owners current information.

 

If the property is owned by a separate real estate holding company you will get the corporate name and address and phone number. If it's a single owner it's usually the property owners personal residence.

 

Some people are unfriendly and disgruntled when you approach them. Disregard their foolishness. Your purpose is to sell yourself and your proposal in a way that is real to them.

 

I would start off saying " Hey my name is Andre and I'm interested in purchasing your property at 500 Yellow Brick Road in Kansas.

 

Then don't talk! Just listen! You need to know what the property owners intention is with that property.

 

If you get nothing worth while just ask, "Well what do you think you are going to do with the property?, if they give you a clear concise answer, then they have a clue. Monitor the property for another month and go back again.

If you get a uncertain answer, they need an idea. You better have an idea for them. That's your cue.

 

I typically make offers and sort it out later. Try to purchase at 70% of appraisal value or less.

 

There are certain steps that must be taken before buying and closing. But first you need options to buy.

 

There are steps in between and steps before agreement and steps before closing but those are meaningless at this point.

 

In sequential order:

 

Real Property

Information, Owner

Prospect- Owner, decision maker

Proposal to purchase

Approval to sell by owner

Due diligence

Offer