To Move Or Not To Move

[JWhiteSensei]

I have reached something of an impasse at my dojo. It is what I have been calling "good trouble" for about three months now.

I lease a small building. Makes sense. I run a small traditional dojo.I have seen one martial arts school in our small shut down. There are others who are struggling. I seem, however, to be in the midst of a growth spurt. My student base is quickly outgrowing my floor space.

I have to admit I was very lucky getting my building as small as it is. It actually sat vacant for two years, almost like it was waiting on me. When I got into it, I paid the landlord six moths rent in advance at $500.00 a month. We said at the end of the six months we would sit down and discuss where we went from there as far as raising the rent. The six months turned into almost a year and a half before the rent finally went up to $600.00 a month. That’s still not bad by any means.

I never signed a lease. The landlord does no maintenance on the building. The AC didn’t work. We used fans. The walls needed painting. I used to paint for a living. Light bulb needs changing, I go get a ladder. This has all been ok up until now. Last year I forked over the money to get the AC going. Very good feeling to have cool air at the end of a workout. The gas has not been on in the building in over four years. The two years I’ve been there we used electric space heaters. They work but they take forever to get it up to around 65 degrees in the dead of winter. Plus the electric bill shoots up from $25.00 during the Summer to over $100.00 in the Winter. I have a Tai Chi instructor who has mainly elderly students. They can’t take the cold.

So, last week I forked out $500.00 to get the gas turned on. Guess what? Even after it was turned on, the heat still didn’t work. Today I had a guy come out and take a look at it. It seems the gas lines are in really bad shape. I’m looking at between $300.00 and $400.00, low end, to get it going.

There’s a building down on Main Street. It’s over 1800 square feet with TWO, count em, TWO, restrooms and a nice area in the back that could be converted into a changing or warm up area. The guy who owns it is going through a divorce and living in the apartment that is upstairs. He told us that he would reimbursed us for any work we did to improve the building. At first he said $1,100.00 a month. After talking to the wife for a few minutes je went down to 900. By the end of the conversation, he had mentioned $750.00.

So I’m going down tomorrow evening and take a look at it with him. This is probably the biggest roll of the dice that I have taken in the two and a half years I’ve been running a dojo on my own. I’m really trying to weigh the pros and cons of it. I don’t mind pulling a little cash out of my pocket to stay open. God knows I have in the past. But I have to think about my students as well. If I happen to go under, I’m really letting down 25 other people, a lot of whom are kids.

Any comments or wisdom would be appreciated.

[jjaje]

So rent might go from $600, to $750 (or higher). You didn't mention your average monthly income for comparing.

You would be moving into an 1800 sq ft location. How much of that is training space? (If you subtract bathrooms and dressing rooms). How big is your current space?

Right now you are month to month, would the new location lock you into a long term contract?

Too many unknowns to offer much bu questions. Most economists believe commercial real estate will lag any recovery in the economy. If you have a long term focus, this could be a good time to lock in good rates on an upgrade.

[karateguy]

I think you definitely need to look at the revenue involved, how much incremental revenue you would gain..

Also, check with you students.. get their input..

post some numbers, would be glad to look at them..

[JWhiteSensei]

So rent might go from $600, to $750 (or higher). You didn't mention your average monthly income for comparing.

Between 600 and 700 dollars at the moment but have been having some new sign ups

You would be moving into an 1800 sq ft location. How much of that is training space? (If you subtract bathrooms and dressing rooms). How big is your current space?

The 1800 is all training space. Nice area in the back with bathrooms. office, changing room, warm up area ect. And the property is on Main street. Great location. This space is at least twice as big as where I am now.

Right now you are month to month, would the new location lock you into a long term contract?

I am month to month at the moment..kinda. Long story. The new place would lock me into a 6 month lease with discussion at the end of that 6 months as to whether to raise the rent or not

Too many unknowns to offer much bu questions. Most economists believe commercial real estate will lag any recovery in the economy. If you have a long term focus, this could be a good time to lock in good rates on an upgrade.

The adult students and parents I have spoken with so far are good with it. One of my black belts has even said she waould pay extra tuition to help

[Abbax8]

Some other factors to consider;

Would the new location cause you to lose students because they need to travel farther or would the new location make it more accessible to new students?

Is the new location more visible from the street thus providing free advertising to passers by?

And the big one, do you feel like your being used in your current location?

Peace

Dennis

[DragonMind]

Good advice/questions so far. I'm going to come at you from left field.

1) what would it take to buy the building instead of renting?

2) what does your marketing budget look like as a percentage of revenue?

3) how well do you market your school, i.e. how are your inquiries/sign up ratios?

[jjaje]

And one more question, how will the divorce affect the building you are thinking of renting?

[JWhiteSensei]

Some other factors to consider;

Would the new location cause you to lose students because they need to travel farther or would the new location make it more accessible to new students?
It's a really small town. Only about 30,000 people. So no, I wouldn't loose anyone

Is the new location more visible from the street thus providing free advertising to passers by?
It's right on Main Street with a storefront

And the big one, do you feel like your being used in your current location?
I do in a lot of ways. I mean I understand that the tenant is supposed to maintain upkeep on a building, but this is a bit too much considering that sooner or later I will outgrow the building even more than I am now and when I leave all of the things that should have worked anyway will be in order and the landlord will have done nothing but make money off of me and get his building in better condition.

Peace

Dennis

Thanks Dennis

[JWhiteSensei]

Good advice/questions so far. I'm going to come at you from left field.

1) what would it take to buy the building instead of renting?
More than my current resources would allow. I've thought about leasing to own but couldn't get the owner of that building to bite.

2) what does your marketing budget look like as a percentage of revenue?
I'm still crunching some numbers on that.

3) how well do you market your school, i.e. how are your inquiries/sign up ratios?

I do a lot of marketing through the newspaper and a LOT more through word of mouth. In most cases if I get them in the door I can sign them up.

[JWhiteSensei]

I would like to add something here if I may. At this time, I'm not in this for profit. I work for the Fed Bureau of Prisons and make decent money. this is something I love to do and am nurturing it as a business for after I retire in a couple of years.

I have worked at it for about two and a half years and am seeing growth when all the other schools in the area are either diminishing in enrollment or closing down altogether.

[Brian R. VanCise]

If he and his wife are going through a divorce it might be an opportune time to buy the building and rent the upstairs out to him or another tenant. Just a thought.

[JWhiteSensei]

I have chosen not to move at this time. The landlord said he would take the $750 for two months then go up to $900. The first two months would be no problem as far as just the rent goes. However I would not be able to afford advertising or even the utilities unless it came from my own pocket which I can't afford right now.

I gathered my Sempai together and we decided to manage our time, opening new class times, in order to relieve the congestion during normal classes.

I wrote a letter to the landlord asking him if he could possibly assist me with the cost of repairing the heating system. In the mean time I will use the left over money on advertising and try to bring the student base up to such a number that I can afford a move.

I feel much better with this approach instead of rushing into something then in two months having to close the doors. I have a responsibility to my students to take care of them and make sure they are afforded a place to train. I can't let my ego get in the way or force me to do something that might put the dojo's future at risk.

[wingchundo.girl]

Seems like a wise move to re-adjust your hours to accommodate new enrollment. Of course the poor conditions that you have to work under makes the situation less than ideal.

I want to impart a few lessons that we learned about renting and growth. When the company my husband worked for folded, we took the opportunity to open a school and this has been his livelihood for the last 21 years. It always seemed that we needed more space. A place for parents, a larger training floor, a larger office space, a pro shop. Every time our student body grew we kept looking for slightly more space. This affected our bottom line. Although we were very proud of our school and enjoyed the extra space which allowed more students per class, I realized years later, that going for that extra space should have been a lower priority. By making your space work for you, you will realize a higher rate of return and help maintain a healthier monthly cash flow and less stress. I know you are not doing this full time, but I think the same principles apply.

Finally after 10 years of renting, we bought a building. The mortgage was lower than our rent was and it never goes up, except for taxes of course. And now the equity on the building has risen nicely. (I call our building our retirement money.)

On your other issue, since I have parents that stay, women always need a warm comfortable place because they are sitting still and feel the cold right away, whereas your students are working out and heating up. I also have seniors in our school. They will leave your school if they are uncomfortable. Of course some schools do not allow for spectators, but we solved the problem by raising the floor slightly in the parent area and have the heat coming from under the floor.

Your landlord should be responsible for the heating and cooling of the building, and the structural integrity of the building as well. But I know very well that it sometimes means, rent goes up when you ask them to do their part.

Wishing you continued success.

[JWhiteSensei]

Liz,

Thank you very much for your advise. I sucked it up and called the HVAC guys to come fix the heat. they will be here tuesday. Fortunately we have a warmer weekend coming up.

I do have elderly students. I have a lady that teaches a Tai Chi class and they are a big concern to me.

We will manage our time a bit and wait and see how things work out. Hopefully, one day, we will be able to actually buy our own building. One very positive thing that came from this; my wife contacted our local 4-H organization in hopes of getting us new students. I have to show them my credentials, show them my student handbook, take a two hour class, and I will be a new 4-H Leader. They will send me students and pay me a percentage for each one. That will help us out tremendously.

[JWhiteSensei]

I found another place on Main St. here in town. The rent is $75.00 cheaper than what I am paying now. The place needs some work but the landlord said he would re-do the cieling panels, lay new tile and carpet on the floor, replace damaged wood paneling, and install a swamp cooler before Summer.

The building is about four feet more narrow than where I am now but it is over half the length longer! The location is awesome. It has a store front. I'm leaning heavily into moving into this one.

[JWhiteSensei]

I've been meaning to post this for about three weeks now and just haven't had the time.

I made the move/ The landlord stayed true to his word and made the improvements. He even lowered the rent another 25 dollars. The place looks AWESOME!

One tiny problem...

I was at the old place the day before classes were supposed to start at the new one doing some painting and cleaning. The phone rings and it's the City Planner. She asks me if I've opened up my business down on Main STreet. I told her that I had not but was planning to the next evening. She then informs me that my new building has not been zoned for a martial arts studio and would have to go through a special review by the Zoning and Planning Commision. We talked for a few minutes and she told me that I had missed the deadline for February's City Council meeting and it would probably be sometime in April before I could open my doors!

Well, needless to say I felt like a fool. I have been operating out in the county for 3 years where there are no zoning laws. No excuse for not checking. Luckily I have a good enough standing with some of the other instructors in the city that a friend of mine that runs a Tang Soo Do school has let me teach out of his building until I get everything settled. That was very nice of him and at least my students have a place to train. It just saddens me that I have a nice place that actually looks like a Japanese dojo with all of my stuff in it and can't use it. I caught another lucky break and the landlord said he wouldn't charge me rent as long as I wasn't teaching out of there even if all of my equipment is in the building.

So now I'm playing the waiting game. I have a man on the City Council who is sympathetic to my situation. Guess we'll see if that does any good.

[Prince Loeffler]

I've been meaning to post this for about three weeks now and just haven't had the time.

I made the move/ The landlord stayed true to his word and made the improvements. He even lowered the rent another 25 dollars. The place looks AWESOME!

One tiny problem...

I was at the old place the day before classes were supposed to start at the new one doing some painting and cleaning. The phone rings and it's the City Planner. She asks me if I've opened up my business down on Main STreet. I told her that I had not but was planning to the next evening. She then informs me that my new building has not been zoned for a martial arts studio and would have to go through a special review by the Zoning and Planning Commision. We talked for a few minutes and she told me that I had missed the deadline for February's City Council meeting and it would probably be sometime in April before I could open my doors!

Well, needless to say I felt like a fool. I have been operating out in the county for 3 years where there are no zoning laws. No excuse for not checking. Luckily I have a good enough standing with some of the other instructors in the city that a friend of mine that runs a Tang Soo Do school has let me teach out of his building until I get everything settled. That was very nice of him and at least my students have a place to train. It just saddens me that I have a nice place that actually looks like a Japanese dojo with all of my stuff in it and can't use it. I caught another lucky break and the landlord said he wouldn't charge me rent as long as I wasn't teaching out of there even if all of my equipment is in the building.

So now I'm playing the waiting game. I have a man on the City Council who is sympathetic to my situation. Guess we'll see if that does any good.

Good Luck and Yes, I do know the frustration you're feeling now. I went through it 2 years ago in some godforsaken town in Lawndale. Nice location, Landlord said it was ok, and secondly two blocks behind me was another martial arts studio so I didn't think of it. I paid rent for about 6 months....the voila !!! 2 months later ! out of the blue, the City's Sturmabteilung ... errr I mean Code Enformcement officer came down to tell me that Martial Arts Studios are not zone in my area.



I went to the city and guess what the gestapo tells me...err I mean the city clerks tells me for a requirement.

First I have to apply for "special permit" ..sure fair enough, now come the hard part.

I had to submit a floor plan for the existing building, then pay some architect to draw the property and my proposed dojo layout .

I had to submit area maps showing individual lots and assessor parcel numbers. I had to mail all property owners and residentss within the 500 radius of my proposal.

Samples and colored elevations of the propsed property

Preliminary enviromental assesetment.

I must submit floor plan , all drawn to scale, description of the various uses within the building. Location of windows and exterior doors...

on top of that I have to pay for the permit fee in which cost $1800.

Ohh there's more and I am getting cranky....

That's nice, but a liquor store won't have any problem applying for a permit.

Again good luck and go break them legs !

[JWhiteSensei]

Been through just about all of that. My only break was that my permit only cost 200 dollars. You're right as rain about the bar thing though. Two blocks down the street they put in a medical marijuanna shop with little or no problem at all.

I mentione to one of the City Councilmen that they should offer temporary permits of some kind. He whole heartedly agreed with me and said I should suggest that at the meeting / hearing.

And the drama continues...

[wingchundo.girl]

I know your pain. We were about to buy a building, a fixer upper. The realtor knew better and the owner, that just happened to be on the zoning board no less, very rich, very powerful person in local government, was the seller.

They kept saying over and over, just go before the zoning board and ask to have the property rezoned. It's easy. We almost fell for it. I kept getting a sick feeling in my gut, so I went to the zoning board myself to get the truth. Everyone I talked to kept saying, there is no way and then say, Mr. Z the owner should know this. Why is he selling you this property? We had already put down a substantial deposit. Luckily for us we had put a clause regarding parking requirements, which is also another zoning problem, and was able to get out of it.

If we had gone through the deal we would have lost everything. We would have been stuck with a mortgage and no income to pay for it, and stuck with a building we couldn't use. It would have been a devastating blow to our family, dropping us into poverty. The kicker is that these people fully realized what they were doing was wrong, but didn't care. It was business.

When it comes to commercial property, the consumer laws do not apply as they do for buying a home. Beware. Check all codes, zones, and ordinances and go to the source. Don't rely on agents or landlords.

I'm sorry I hadn't mentioned this before to you.

[JWhiteSensei]

Luckily our zoning laws are a bit leaniant. I'm going to be approved. 15 years ago the building was a dance studio which fall under the same catagory as a MA Studio, a Training Facility. It's just the WAITING that's killing me. I managed to pick up 2 new students tonight. Their Mom parked in front of the new dojo on her way to pick up some dry cleaning and loved the way it looked. I just wonder how many I've missed like that not being there!!!