Birth of an idea, explanation of the envisaged business model
When an investor succeeds in several projects, he becomes greedy and sees things in a big way. Christopher is certainly the most specialized member in the diversification of investment strategies. The expression “not putting all your eggs in one basket” takes on its full meaning. For the past few years he has been maturing a project to diversify his assets and thus own a warehouse. The recent boom in co-warehousing companies makes you want to ride this wave ! At the beginning, we were 3 people in this project: Christopher, Tayler and myself Tony.
Unfortunately, life sometimes decides for you and you have to rethink your priorities. For my part, my wife and I have built a house to better raise our children in the country. I was out of the running, unable to add a credit on a risky project. Buying a deposit is a very daring project. You start from a virgin surface and you have to fill every square meter to get a good return. The selling price of this type of product is also a brake, very popular in the city to build large apartments or lofts. Real estate sellers know this and prefer to find a loft clientele rather than an investor who wants to park vehicles or do storage.
We can say that Tayler is too restrictive in his mind to embark on such a project which requires you to go outside your comfort zone (small reference to training how to expand your assets). He is going to tell you about some of the visits in the company of Christopher. Then you will discover Philip, a company boss who has known Christopher for several years and who has finally embarked with him on this purchase which will be his first investment in car parks !
Draft project and first visits with Christopher
Now that the idea is in place, we had to understand and train ourselves in the field ; the only method that really works 100%. In most cases, we have to turn to real estate agencies to visit warehouses for sale. You will also find classified ads on leboncoin that will usually take you back to a reseller agent. We visited 6 warehouses in the area. There was everything: from ruins with water infiltration to beautiful buildings that were worth a real fortune…
When you’re looking for a warehouse, you’re in the atypical. Each visit is unique and the table to note a good parking gives you only a small guideline. You must constantly imagine and project yourself on the layout, accesses and works. We keep with Christopher a very shared common memory, on the one hand the surface makes you dream but on the other hand the starting point is consequent.
Frankly, we were fed up with those salesmen who only talked about loft apartments. Each time the salesman had to imagine a mezzanine above our parking lots to make a loft. The most surprising thing is that even in hangars without water, without mains drainage and with an electrical installation from the 60’s, the salesman only talked about creating a loft as if he was hoping to change our mind and abandon our initial investment project.
A promising visit
An agency had found us a very special property that corresponded in every way to our expectations. It is the property of a former retired craftsman, the property consists of a house of about 100 m² on 3 levels and a warehouse with a surface area of 1000 m². The advantage of this product is its geographical location north of medium city. Two well separated accesses and a warehouse off the main street away from prying eyes was the top. The problem was the selling price, the whole was around $ 220,000 excluding agency and notary fees.
The estate agent then explained to us that the house was worth $ 120,000 and the deposit $ 100,000. The access to the deposit was 2 meters wide and 3.5 meters high. A godsend since the accesses are separated by two separate gates. There are even two separate electricity meters. We wanted to meet the owner to convince him to sell us only the warehouse. Unfortunately the old craftsman is very greedy… As we are interested in the warehouse the price of 100 k€ included in the property has exploded. It is climbed to 180 k€ excluding expenses for the deposit alone! As much to say to you that we did not follow up. The return on investment after boxing of the deposit is so low that the project was really not going to be viable.
When you can’t find it, you have to let time pass
At the end of this last visit, Tayler gave up the warehouse project to devote himself to the garages. Christopher found himself alone on this file for several months. Even though he did some research, buying so big on his own is neither reasonable nor feasible. He refocused his research on a lot of about ten to twenty boxes to diversify his investments and build up a park dedicated to storage and furniture storage.
A relationship that will revive the project
One day, Christopher sees Philip again, an old friend. The latter asks him many questions about the state of his investments in car parks. Philippe is looking for an investment to build up additional income to prepare for his retirement, which will hopefully take place in 7 to 8 years. The warehouse comes back to the heart of the debate. Entrepreneurship does not scare Philip, who has a lot of experience in creating and managing businesses. The project is seen as a mini-company that allows for maximum tax exemption. The objective is to reduce the income taxes of the two investors. The time it takes to get started and then generate income. After several joint meetings, the two investors are in phase on their goals and objectives. This is the most important element in an association !
Christopher and Philip visit a very interesting atypical property. On paper, it offers a perfect configuration for a profitable activity. The property they visit is a former hosiery factory. A textile factory which has been converted into a bachelor flat for motorsport enthusiasts by the current owner.
Built on a building plot of 1800 m² the warehouse is divided into two parts. A dwelling of type T3 on 95 m² with an adjoining warehouse of 143 m². An outside metal garage is even part of the cadastral plan. The geographical situation is good on a small town. To park prestigious vehicles it is sometimes necessary to isolate oneself a little from the towns where pitches are often visited by thieves. The selling price officially displayed on the advertisements on the internet and in the estate agency is $ 149.000 FAI. Fortunately Christopher and Philip know the owner…
They can visit the property and exchange directly on the selling price while earning the agency fees. This property has been for sale for several months. The owner is understanding, an investor’s project requires a good profitability. Its non-negotiable minimum price is $ 100.000 net seller. For once the negotiation is frank there is no more time to lose. The land is rectangular and flat to the back of the warehouse and then slopes down a constant slope.
The main entrance already has a wall and an automated gate. The right and left sides of the grounds are easy to fence off as wooden posts are positioned at regular intervals, ending at the bottom of the grounds with a 1.5 m high fence. Even if the warehouse is small, it will not be able to meet the initial project of wintering camper vans; it can be used to park prestige vehicles. The term concierge service is reserved for a company; insurance covering the value of the vehicles is required. In our case, we will stay on garages more adapted to Civil Real Estate Companies. It is the great potential offered by this building land that seduced Christopher and Philip ; for the storage part, furniture storage in containers on the model Mondial Box.
Market study for the rental of the warehouse
Several members of the club are familiar with this sector market. Cradle of our group, it was the training ground and the one of our first experiences. The website is also well referenced locally thanks to the advertisements made by the owners. We receive many requests concerning storage and furniture storage. Not yet having a standard sign HomeBox on the area. People are turning to individuals or moving companies. We have also launched an advertising campaign to rally owners of winter storage and camper and caravan parks to our club. The latter are not interested since their occupancy rates were over 95%.
A strategy to test your regional market may be to publicize the club. Through this roundabout way, you get valuable information about their business. Conclusion for Philip and Christopher : the demand is there !
Profitability through diversification
Strategy is simple. Use all the tricks known by Christopher from the start of the project to get the best possible profitability from the first few months. The simplest solution is to rent the whole property to a car enthusiast. The income will be correct in the order of 6% gross. The problem is that Christopher hates the housing concept, bad payers and possible damages are his obsession. So he and Philippe have to revise their copies: the idea is to create a pole with several axes of money entry; the warehouse is dedicated to winter storage and guarding of luxury and prestige cars. Offering services such as the provision of water, electricity, a karcher and tools to use the pit. Giving freedom to tenants while offering services that may or may not be paid for can justify a basic rent that is higher than the average.
The land at the rear of the building will be used for storage of furniture, cars and trailers thanks to the installation of sea containers. The whole property will be placed under video surveillance. The T3 type accommodation will be allocated, for a low rent, to a caretaker who will also act as manager; the profile envisaged is a retired person with a low income. The general idea is more to have someone on site to increase security than to earn money with the small dwelling.
The concept chosen to make the site profitable is to install a battery of maritime containers in the field. The whole placed under video surveillance by duplicating a Mondial Box model. Ground levelling works to make concrete beams are to be planned to correctly install the containers on the ground. When we take up again the study on the cost of the maritime containers you see towards which profitability we will arrive !
Are you interested in the rest of this article ? Discover the returns on investment by product type ; why this warehouse is not selected? Discover the warehouse that Philip and Christopher bought in 2018 and all their works :