The Millon Dollar Gym: Rent to Own

rent

The lease for the current location of CrossFit 859 is up in 18 months. We currently occupy 6,000 square feet in a strip mall complex with high visibility and traffic. Rent is $5,000 a month along with a $1,600 per month CAM (Common Area Maintenance). For the area and location of our facility, this is a very fair price, but two things always enter my mind each month when writing the rent check.

  1. That $6,600 per month is making someone else money.
  2. We have run out of room for expansion.

These two thoughts are what have sparked the idea of owning opposed to renting. Build a custom facility that meets all of our needs while owning both the land and building itself. Each month the rent would be going toward the best landlord I can think of: me.

This will allow the CrossFit business to grow, allow for the introduction of an athletic performance side of our training and put us in the commercial real-estate business. The first lease will be with the best tenant I can think of: me. Side note, my favorite charity to donate to? You guessed it: me.

The way this would be set up is to start a new business entity that would own the land and building – we’ll call it Awesome Eric, LLC. CrossFit 859, a separate business, would then enter into a lease agreement with Awesome Eric, LLC to rent the space. I now have two streams of income, one from the gym business and another from rental, all while dealing with the best landlord and tenant I can think of. Having the building and land separate from the business also helps protect the property investment from any liability the gym may carry along with it.

This plan is very appealing to me as a business owner and solves my rent check dilemmas. I would be keeping a large portion of the gym’s revenue that normally went to someone else for rent while moving into a brand new custom facility that would allow for expansion. I know what your thinking, and only because it’s what I was thinking. This scenario solves two questions, but brings up new ones.

  1. Where do I build?
  2. How do I build?
  3. How am I going to pay for it?

I will cover these in the next blog.

Mike Bledsoe of Barbell Shrugged and Barbell Business gave a great piece of advice at the Barbell Business Mastermind I attended: “Let’s stop fighting each other for the same small piece of pie and start working together to make the pie so big we can all have as much we want.”

Eric Karls
Eric Karls is a founder of CrossFit 859 in Nicholasville, Kentucky. He also helped open CrossFit Fisticuffs in Georgetown, Kentucky, and is the founder/supervisor of Georgetown College CrossFit. Eric can be followed on his personal Facebook or contacted at crossfit859eric@gmail.com.