1st deal sweet or Not?

Question

So, recently I closed on a property in SC. Currently the building is vacant, at one point it was a functional beauty salon. This is my 1st deal EVER. My plan is to convert into a barber shop, should be a smooth transition. Property zoned for commerial use. My parents owned the salon across the street, i lived in VA. So definitely long distance. Barber actually pay for booth rent. In SC market barber's typically pay anywhere from 100-125 per WEEK. This property has space for at least 6 barbers possibly more! Remember still a newbie here so be nice when you critque my numbers.

So here's the numbers: seller finance

Offer price: 38,500

Down payment: 2300.00

Interest: 9%

Monthly PIT: 567.00

Cashflow: 1800 minus utilities.

BOOM!

Thanks Biggerpockets! future updates coming soon.

So here's the numbers: seller finance

Offer price: 38,500

Down payment: 2300.00

Interest: 9%

Monthly PIT: 567.00

Cashflow: 1800 minus utilities.

BOOM!

Thanks Biggerpockets! future updates coming soon.

Natalie Kolodij · Answer

You're mixing rental with business.

Barber's/ Stylists pay that amount for a space in an advertised, well known, functioning, stocked salon.

Utilities are going to be a decent amount for a salon, water and electric use are fairly high in these businesses.

How much will it cost to install 6 stations in the space?

Will you be providing back bar items?

Are you budgeting for advertising?

Phone and Booking systems?

It's not like a trailer park when they rent space and handle all bills- normally ina  salon setting the salon owner is providing things besides the actual space for that price.

Shelby Robinson · Answer

@Christopher  Stanis

I just closed on last friday. I know this market very well. Your correct I will market for barbers asap. I just purchased 60 bandits signs. Also 11ft barber flags. They arrive Friday. This is the same process that my parents use for beauticians. Also in the past the building was used as an X Ray lab, Dr. Office, and then a salon. So the potential is there.

Christopher Stanis · Answer

@Shelby Robinson- have you tried to advertise for barbers yet? If I were buying the property, part of my preliminary homework would have been to advertise the space online, at rates 75% of competing spaces, to see if there is any movement or interest.

Since it seems like you've already purchased this property, you may want to start advertising now.  I would also suggest putting on a creative thinking cap, and asking "if this property were to generate income in a non-barbershop way, what could that be?" If you're struggling with a solid Plan B, and Plan C, you may want to connect with an experienced commercial real estate broker.  They can give you advice about alternative businesses- usually for free since they'll hope that you use them to help lease it out. Good luck with your new property- whichever route you take!

Shelby Robinson · Answer

absolutely not...my parents has a salon only stylists and braiders, these requiring a different license due the use of chemicals. Barber don't use chemical. The previous owner had a drug issues. We know her relatives.Truly unfortunate, she was doing great at the start but lost her way. Most importantly I understand my market. I will keep you guys updated.

Thomas S. · Answer

Are you planning on putting your parents out of business by competing with them.

You may want to rethink your plans. If the previous owner lost the business I would guess that singles a fairly obvious problem. Doing the same thing over and over trying for a different result isn't logical. Try to think of a better business for the building that will work in the area.

Shelby Robinson · Answer

Yes....it has been converted for more space. So yes 6 barbers.

Shelby Robinson · Answer

@NatalieKolodij

This will be strictly a barbershop rural SC. Barber do require more electricity but minimum water. Station are already set up from the previous owner. She lost the building due to (delinquent taxes). Although the building is vacant. ALL equipment remained inside. No back bar items. Advertising for barbers yes, customers for the Barber no. I have purchased banit signs to attract barber. Banners for the building and I have a sign company coming to install a official sign. High traffic area also. No phone systems for booking needed. Hope that anwser your questions. Thanks for the input.

1st deal sweet or Not?

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