Location, Location, Location
You’ve probably heard this before, but let’s take a look at it. The phrase that Real Estate agents are tossing out of “Location, Location, Location” is what determines the price of real estate. That is to say, a piece of junk house in Beverly Hills is worth a lot more money that a huge mansion in the middle of west Texas. Location has a huge affect on real estate prices. So knowing that, when you examine the market, you can take advantage of this concept.
To a large degree, it doesn’t much matter where you have your field. A field is a “destination location” business. That is to say that as long as someone can find you, and drive to your place, it really doesn’t matter where it is. Which is a good thing.
If doing an outdoor paintball field, you are going to need a lot of room. Acres and acres of land. For an Indoor paintball field, you are going to need a large building. The problem is, a lot of land, or a large building is going to be a bit expensive. Expensive to buy, and expensive to lease. But far less expensive if you are not in a prime location. And as long as you are not too far away – that should not hurt you much. How far is too far?? That will depend on the frame of mind of the people in your demographic. In the Dallas area, people don’t think much about driving a half hour or more to get somewhere, and I have a lot of customers that come in every week that make a drive of up to an hour to visit our facility. But our place is also just off a major interstate road (I-35) in a north Dallas suburb called Lewisville, TX. And there is shopping, malls, restaurants, etc. within a 5 minute drive of our facility. This is perfect as it allows parents to drop off kids, and go to a movie, go eat, shop, etc and pick them up later. Ideally, you want a location like that if you can find one that is affordable.
People ask us all the time if we would allow another GatSplat Paintball Franchise in the Dallas or Ft. Worth area. YES! We have calculated how close fields can be while actually supporting each other, and not cannibalizing each others customer base. With years of data for us to draw from, we can drop customer data of waiver addresses on top of the map, and see what the spread is for premier location placements to assure maximum exposure and profit for a field.
If you are starting your own independent field, I’d suggest getting a full work up of the demographic circles radiating out from your intended locations so you can determine where would be the ideal place to put your business.
So that’s what you’re looking for – then the big question that pops up on the forums all the time – “Should I buy or lease?”
Well, you might be saying, “but I don’t have enough credit and cash to get a loan to buy.” If you stop and analyze it however, sometimes it can be much cheaper to buy than to rent. (WHAT!!!!)
Let’s look at a deal I did in 2015 for our Rowlett Gatsplat Facility. I found a city I want to put another GatSplat Franchise in. I’m looking to do a single field facility, so I’m looking around 15,000 square feet. If I was going to rent the building, let’s assume a $8,500 rent. So, to get a lease, I need 2 months rent, plus the security deposit of a month. So that is $25,500. And we’ll assume it will be 3 months to refurbish and get the building open, so that’s another $25,500, so rent I’ll be out $51,000 before I open the door. Let’s assume I need $100,000 in finish out – restroom upgrades, some extra insulation, tables, etc, and $200,000 in guns, netting, astro turf, guns, compressor, fill stations, masks, etc. So that is $351,000. And now I start paying rent.
BUT! We’ll assume this building can be purchased for $700,000. And I still need $300,000 in finish out, so that’s a mil all together. I hit up the bank, and with 20% down, they finance the project. So I put down 200,000 instead of $351, and my monthy note on that (quoted today) is $5,385 per month. So that is $3000 a month cheaper than the rent. Now property taxes come out at the end of the year, and that property is about $14,000 in property tax, so my net savings is about 2,000 a month, or 24,000 a year. Then over and above that, I am paying down the note on the building and growing appreciation value in the real estate.
Now, obviously, if you find a desperate owner that really wants a building rented, you might find a very cheap rental rate, and maybe even negotiate for 6 months free rent and some of the finish out. So, take a look at all aspects, and don’t be afraid of buying if you have the credit power. I own 8 different properties, and it will generate income for the rest of time at positive cash flow.