Commerical Property to Let help.

[Copestake]

Hi

I'm relatively new to the property letting side of business. I have found a nice location where I could start a business as the business before has closed down.

Having spoken to someone who is letting the building they said the price was 18k a year with a 12 month contract.

Just wondered if anyone has any advice for me to help renegotiate the price and what type of prices people pay.. I personally can't see a company paying that much for rent and still make a profit.

 

[thebigIAM]

Initial thoughts are that a 12-month lease isn't very long. Is it a retail property?

 

[saracen]

A retail property with only a 12 month contact ? Be weary.

What sector are you entering ?

Remember a retail outlet needs to be fitted out. This alone is expensive. So a 12 month lease wouldnt be viable. Most are 5 yrs or indeed 10 yr lease with a review after 5 yrs.


18k rent ? dont forget rates and other overhead running costs, insurance, water etc.

I know many people who are paying 100k per year rent/rates for a business and they make a very good profit.

 

[Copestake]

I dont know the full details as of yet, I'm going to speak to the owner on monday.

Really its not the building thats got me interested because I'm looking at a car cleaning, valeting business as the location is on a very busy road with a drive in & out facility so making the building look respectable shouldn't cost too much.

I've seen alot of car cleaning places that use old petrol stations which much cost more than 18k :S

 

[thebigIAM]

As you've described it, I would have thought 18k was a typical price. I would hang out for a longer lease, but maybe have a break clause after a year so that you can walk away if you wish.

You could do a lot with a site like that on a busy road. Did you see Parcelpark's recent post? Check out www parcelpark com . His collection points earn 46p for each parcel it takes in. If you're on a busy road you might take in enough to make it worth your while.

You could consider being a collection point also for dry cleaning (Maybe?) and I notice the car hand wash place I go to has just started doing milk/bread etc.

I'd be interested in following your progress. Good luck.

 

[Copestake]

Sounds like a good idea to make some extra income but heres the problem..

18k rent
9k business rates

So thats 27k a year out the window straight away. I would need to take in at last £74 a day before I made a profit.. :\

 

[i234i]

Sounds like a good idea to make some extra income but heres the problem..

18k rent
9k business rates

So thats 27k a year out the window straight away. I would need to take in at last £74 a day before I made a profit.. :\

Please tell me your not going to open the shop 365 days of the year.
also you will have electric/gas/water/sewer/waste to take into consideration.

I'd say on £18k + 9k rates you'd need about £12-150 margin a day and not just money in the till to just clear your costs.

I'd never go to 18k for a new business i dont think unless dead central and it was showing in my workings.

 

[Copestake]

Please tell me your not going to open the shop 365 days of the year.
also you will have electric/gas/water/sewer/waste to take into consideration.

I'd say on £18k + 9k rates you'd need about £12-150 margin a day and not just money in the till to just clear your costs.

I'd never go to 18k for a new business i dont think unless dead central and it was showing in my workings.

It would be a drive through hand car wash with other options available but the main income would be 'drive in, get your car cleaned for £5 and drive out in about 10 minutes'... On a road that is always busy, thousands of cars every day..

I still think there is money to me made but I need to sit down and work out if I could cover the rainy days.. literally

 

[i234i]

i know car washes rough are usually in yards or industrial units on good roads to town with no more rent than 10k.

 

[qul]

How long has the property been vacant for? I keep hearing commercial property is quite hard to let these days for obvious reasons. You may be able to use that as a starting point. I wouldn't be surprised if the landlord is expecting people to negotiate, so may have already factored this by saying £18k when really aiming for eg £16k. Could also try asking for 1-2 mths rent fee period. At the end of the day you won't know what landlord will agree to until you ask. although if you take the mickey there's always risk they'll laugh/get pissed off and not deal with you anymore, which I've seen firsthand

 

[wevet]

Have you enquired at the council about planning permission? You should get that sorted BEFORE committing yourself to a commercial property.

 

[Copestake]

Have you enquired at the council about planning permission? You should get that sorted BEFORE committing yourself to a commercial property.

That was going to be the next step once I decided it is worthwhile.. It's just really hard to estimate how much income it will be.

I went to ask the owner of a car wash near me.. he wasn't very willing to talk so maybe there is money to be made

The property has been empty for about a month.

 

[wevet]

I went to ask the owner of a car wash near me.. he wasn't very willing to talk so maybe there is money to be made

I would suggest you simply sit somewhere nearby and count how many vehcles he puts through.

However, it does sound like you are a bit "green" when it comes to business.

You cannot possibly expect a competitor to give you an insight into how much business there is.

If he is very near, it is important for you to get a real picture of just how much business there is to be had and how competitive you will need to be to gain market share.

 

[Copestake]

I didnt go all guns blazing asking how much money he made just had a convosation trying to fish information but didnt really work. The location is in a different town with no other competition around.

I will sit around for about an hour to get an estimate of how many cars pass through.. hopefully enough to allow me to justify 25k a year

I'm young so that is why I'm "green" to business

 

[thebigIAM]

I can totally understand your reservations about the high rent. The car wash I use regularly had queues about six months ago (maybe in rough weather people use a car wash more often?). I would say it easily would have clocked up more than 20 £5 washes per hour at peak times every Saturday. Last weekend I was the only car for all the ten minutes I was there.

These places always seem to have plenty of staff - another significant cost.

Maybe you could widen your search for premises and see what else comes up?