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I want to Rent my Shop and Building to someone. Any Ideas how to go about it?

dalihbt

Plastic
Joined
Jul 3, 2009
Location
florida
Hi All,

I have a Wire EDM shop that I've built a good customer base over 15+ years. I don't have as much time to dedicate to the business anymore, so I'm looking for ideas on how to rent out my shop and the building space (I own the building too) to someone who wants a turn key business. Ideally someone with more time, ambition and knowhow.

I have 1 very new Sodick Wire EDM (only about 2 years old), 1 Haas TM2 Vertical Mill (With tool changer) fully operational, 1 Milltronic Vertical CNC with tool changer (Its down now, but It wont take much to get it running), 1 Bridgeport Mill, Drill presses, Band saw, Fork lifts, and a lot of tooling and extra equipment I've accumulated over 15+ years. I also just purchased a building, which I moved all the equipment into. The Air and power are all hooked up, and the machines are powered up and running. I would basically let the interested party use everything I have to run their own business.

95% of my work is Wire EDM, and I don't really run the CNC mills at all. So I would source all of my existing customers work to the leaser, which they would pay me a percentage of maybe 25% to 30% for all the work that comes from my customer base. The work I could feed would more than likely be able to pay for half (or more) of the cost to rent the business and building. I would be available most of the time to run the Wire EDM if needed, they would just pay me a Wire EDM operators wage, and once they are comfortable with the machine they could run it themselves or hire someone to do it. I have a LOT of experience on the Wire, so I would always be available to help with new projects if they needed it.

So ideally if someone has machining experience, or has always wanted to have their own shop, this would pretty give them the opportunity to do so with CNC milling machines ready to go. The Wire EDM work I could feed them would pay for a good portion of the Rent overhead, which would give them the financial peace of mind to do it. They could easily expand into new machining work with what I have on the floor.

The reason I'm looking at this as an option is because I just don't have the time anymore to fully dedicate to it, but since I have good customers I've been working with over the years, I don't want to give up on them, as we have built really great relationships, and they trust that I know how do get their parts done on the Wire EDM.

Sorry for the long winded idea, but I'm curious if anybody has some ideas on the best way I could achieve this goal. It would be a great opportunity for someone to have their own business ready to go with a ton of equipment, a place with all the Air and 3 Phase power they need, I'm in pretty decent location (Not rural), I'm in NC. I would be able to feed them with enough Wire Work to handle a large chunk of the expenses, and I would be here to assist them.

Could I post something on Facebook, Craigslist or some Social medial platform. How would you all go about this?

Thank you all for the years of knowledge I have received from this site over the many years, and thank you for any suggestions you may have!
 
I can't help you much with how to, just a warning that I have heard of folks doing like you only to have all their stuff sold out from under them
 
Kustomizer, Thank you for the response. That is definitely a good warning, I would probably be able to mitigate that risk. As I would still be working in my building, I would only rent about half the space, and keep the other space / office for my other work. This is how I would be available to assist if needed. I would probably need the last 3 or 4 months upfront to cover any shenanigans that may occur. The most expensive items I have, all weigh north of 5000lbs, so that would pose a logistical issue as well.
 
Thanks Bob! What would be the nightmare scenarios you think? I definitely am open eared to the good and bad of going down this road.
 
Why not hire someone?

I can't imagine how this works out well in the end. When I was younger, a former employer tried something similar. He needed sheetmetal components for his business and provided space and some tools to a young guy to be his inhouse sheetmetal shop and allowed the young guy to bring in some of his own equipment and work on outside jobs also. After about a year, he came in one Monday and found all of the young guys equipment gone and that the young guy had moved on to his own shop leaving him right where he started.
 
Thanks Booze! Understandable, The thing is, The work I could feed the leaser (Based on my last 2 years of work, during Covid on top of that) would probably cover most if not all of what it would cost to rent my space. So it would ultimately be a free location with machines ready to go, the person renting could easily expand or bring in their own work, which would be pure profit as a majority of the overhead would be covered by the Wire work. I would only take a percentage for what I feed them.
 
Thanks Phil, Yes I thought that could be another option. Especially with what the banks are giving out these days, it may be more economical for someone to borrow the funds outright. I just figured some may not have access to loans / funds like that. I'm still brainstorming a bit, trying to work out the details.
 
Thanks Booze! Understandable, The thing is, The work I could feed the leaser (Based on my last 2 years of work, during Covid on top of that) would probably cover most if not all of what it would cost to rent my space. So it would ultimately be a free location with machines ready to go, the person renting could easily expand or bring in their own work, which would be pure profit as a majority of the overhead would be covered by the Wire work. I would only take a percentage for what I feed them.

So, why don't you do all the work you have already that covers the cost of the building, and then on top of that, find other work to make money?

You aren't making this sound like a good deal. Maybe we are mis-interpreting your intention, but it sounds like you want to charge for the space and machines, take a substantial cut off the top in addition to that, and expect someone to jump at the opportunity to support you financially just so they can have the opportunity to find some gravy work to have a little something for themselves? Better to hire someone.
 
I did something similar to what Phil said,

Sell dont rent the shop( equipment), rent dont sell the building...Phil

With the added bonus of my best customer did not want to lose the service so he bought the inventory and equipment outright and rented the building. I got a chunk of cash, and an income stream. 22 years later it is still paying out. We are still friends.
 
Well I haven't stated the price, so whether its a good deal or not is up in the air and up for speculation. As I mentioned, I don't have the time to focus on this much anymore as I have other things I'm involved with, so whatever I give them in work will cover the expense, which leaves the rest up to somebody who already has some work and for somebody with more time and ambition to want to grow a business without having to come out of pocket to build up inventory. At the same time they will learn how to properly run a Wire EDM machine (which is out of the realm of a lot of machinists). If they give up on it, then no big deal, they just walk away, they don't have a massive debt to cover. My customers would know they are still getting the work done properly, because I'm still around to assist or even do it if the leaser needed me to, they could focus on brining in new customers and work for themselves, which would of course have nothing to do with me. When I was getting started this would have been a great deal for me, as we all know what it costs to properly get a shop up and running.

I've seen this done by a ton of old timer shop owners I've dealt with in the past, the difference is they just brought on an apprentice, and then made a deal with the apprentice to take over the shop over time. I guess I'm just proposing it a little differently. I do appreciate your input!
 
This is interesting. In my experience, when you bring someone else in to do the work while you 'just take a percentage'.....they inevitably come to resent you since they 'are doing all the work'.

I can't count how many times I've talked to someone who is unhappy because they run the whole business but 'the guy who owns it' insists on having a say in what happens and/or takes a cut of the action.

Human nature is an ugly thing.

I used to ask them, "If you are so unhappy, why don't you start your own place?" But, that never ends well because it forces them to admit, or dance around, the fact they don't have the money to start a business and don't want the 'hassle' of dealing with taxes, accounting, risk of loss, insurance, etc.
 
Thanks Kootne, Very cool, sounds like it worked out great for you! Yeah, I'm trying to work out the details. I was just brainstorming with the Wife last night, so first thing this morning I posted on Practical Machinist for advice, which has always been a great source and wealth of knowledge!
 
Thanks Greg, Yes I know all too well that aspect of Human Nature...LOL I know I wont have folks knocking my door down, but the right person could do very well in this situation, with very little risk on their part, so just trying to figure out how to offer it and find the right person.
 
My experience as a CPA ( for what that is worth ) is that if you find a young person with ambition, a get it done attitude, and a 60 hr a week work ethic, come up with a fair rent number and let the kid get rich and pay you that fair rent, no kicker or %. The only way the lessee will ever be able to afford to buy the shop is if he can make real money. Banks won't loan much on machines, and shops and buildings cost more than what most small operators can afford. That is one reason why the old apprentice program doesn't work ( in addition to work ethic, regulations, etc ).

The difficulty will be finding the person to take over. Large competitors may pay to get you out of the market but likely won't take the shop or building. That is why you see so few small operations selling to other small operations. Dave
 
I want to Rent my Shop and Building to someone. Any Ideas how to go about it?

Yes - don't, either sell out completely / liquidate / close down etc etc, anything else is nothing but heartache grief and high cost.
 
Thanks Dave, Yes I really appreciate your input, especially coming from the accounting side. If the renter wanted to buy me out later would be another thing. My area has a lot of machinists, and most can do basic CNC Vertical / Turning machining, Wire EDM is another thing. They could easily bring in their own CNC milling work, bring in their own new customers, and almost fully subsidize that side of the business by keeping the Wire EDM running with existing work, and they could easily tap into more work if they want to put in the hours. Wire Machines can run unattended for quite a while, so I know for a fact if they wanted to expand to more Wire machines, 1 operator could easily run 3 or 4 wire machines, as I have done that in the past no problem, as long as they have the experience, or someone like me showing them how to properly do that, and tap into new machining work that I don't currently pursue. So when I mentioned it would ultimately be a risk free or very low risk situation for the right person, would be accurate in my opinion.
 








 
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