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View Full Version : Buying office building- How to Find Real Suppliers???



vinese
07-06-2010, 12:29 AM
HI All,

My wife and I are young entrepreneurs (23). I have been in the Real Estate business since 16. Dad has been buying and selling land for the past 20 years and the majority of my personal business comes from selling his properties.

Dad decided to open a residential real estate brokerage in 2008. He signed into a huge office lease agreement for 2 years. 10k square feet. Way WaY WAy overkill on the office. The most agents we ever had was 20 and we still had many vacant office spaces. Not to mention a huge 3k foot open room on one end that has been used for nothing. I love and respect my dad, but I don't know what he was thinking on that one.?

The business has done well despite the economy except for the lease and huge amount of overhead. (ie 2k utility bill in the winter). We are down to about 15 good agents.

Dad saw there was no money in it about a year ago, but was still under lease. At that time he laid off the office manager and handed it to my wife and I.

It's been a great experience and I know it can be very profitable if the overhead was cut way down.

Dad said he didn't want to fool with the hassle of it all because he was working 2 states over in Texas.

Sooooo my wife and I started looking for office buildings and happened to come across a very nice building on a corner lot, at a stop sign in the middle of one of the towns fastest growing areas.

The building had been on the market for a high price a few months prior, and the listing agent that had it did a horrible job on the listing and let it expire.

After some negotiations we arrived at a very good price, well below the appraised value. The owners are moving out of state, and are wanting to dissolve the corporation. Building is contracted and ready to close within the next couple weeks.

The new building is 8,400 square feet and is divided into 9 separate suites with their own entrance and utilities.

There are currently 4 tenants. Those 4 tenants basically cover the mortgage, the taxes, and insurance on the building. Any additional income from leases, or business will go towards making principal reductions.

I will be using one of the vacant units for my real estate office, which leaves me with 4 vacant units to either rent out or open another small business.

My wife worked retail in high school and has noticed that our town is lacking a decent consignment shop. She will be opening a shop in one of the units. I think it is a great idea. No overhead, and I believe the demand is going to be surprisingly high once things get going.

TO THE POINT


My little venture is a drive through tobacco shop. In my small home town about 30 miles south, there is a drive through tobacco shop and they are always crazy busy. It makes pretty good sense. People who smoke don't like to shop. They know exactly what they want, and they want it as quickly as possible. I was thinking of selling tobacco products, gum, and maybe coffee.

I have a unit on the East side of the building that would work perfect. All I would have to do is install a drive through window on the side of the unit.

The way the unit is laid out I wouldn't even be occupying the whole thing. There is basically a hall that leads back to a storage room. The storage room would technically be the tobacco store. The rest of the unit could be leased out for a discounted rate.




I've found all the papers to file with the county, but I can't seem to find any information on actual suppliers. Google is useless for this kind of thing. Everybody on the web uses the term "wholesale" to describe their products so no luck there. I'm looking for true wholesalers who sell only to retail outlets.

I would like to know some basic supplier information, what kind of profit margins, and also what kind of initial investment.

Being in the real estate business allows for me to have a very flexible schedule. I personally wouldn't be working the window, but I would be handling the management side.

I will also be finishing up on my degree in business this Fall. Sometimes it feels like things in my life are moving too fast, but honestly I am at the point of sink or swim... (I'm more of a floater lol...)

Thanks for any help or input!

vangogh
07-06-2010, 01:53 AM
Welcome to the forum vinese. Thanks for sharing your story. Sounds like you have a lot of experience already at a young age.

As for your question, I'm afraid I don't have a real answer, but I'll offer some suggestions off the top of my head. I did some searches and Google and do see a lot of results. I'll trust you when you say they aren't what you're looking for. Maybe refining your search could help though. I wouldn't give up on searching just yet.

How about trying the cigarette manufacturers directly. I looked at the Phillip Morris site and didn't see any information, but maybe that's a route to explore.

How about asking that shop 30 miles south. With that distance you probably aren't a direct competitor. They might be willing to share some information. You might even approach them simply as a curious shopper instead of a fellow business owner. You might not get a full answer by asking as a customer, but you might get some clues. And if that store won't help I'm sure there are others in your area selling cigarettes. Ask enough of them and you should be able to find the suppliers you're looking for.

Hope one of the above ideas is helpful. Welcome again and thanks for joining the community.

Steve B
07-06-2010, 05:26 AM
I had the same problem when I decided to start selling dog food. It was impossible to do a Google search and find a legitimate supplier. I finally found one, but I forget how at this point. You would think it would be easier.

I would do what VG suggested and just ask the owner of a different shop. If that doesn't work, just hang out in the parking lot and get the information off the truck that delivers their supplies.

Business Attorney
07-06-2010, 10:23 AM
Try doing a search on "tobacco distributors" and your state. I have found that most of my clients that sell to business call themselves distributors, not wholesalers. I think you will find that search much more on point.

Evan
07-06-2010, 09:46 PM
You are also very young (well, I say that -- and I'm the same age) and married. If you haven't dealt with this kind of exclusive management before, I hope you have a good attorney and accountant to help you with all of these businesses. It sounds like you have a lot of ideas, just make sure that each of these businesses have records that are tracked. The attorney will be good for drafting up any leases, and organizational paperwork that you may need.

Best of luck with these new ventures!

vinese
07-07-2010, 12:57 AM
You are also very young (well, I say that -- and I'm the same age) and married. If you haven't dealt with this kind of exclusive management before, I hope you have a good attorney and accountant to help you with all of these businesses. It sounds like you have a lot of ideas, just make sure that each of these businesses have records that are tracked. The attorney will be good for drafting up any leases, and organizational paperwork that you may need.

Best of luck with these new ventures!



Thanks for the wishes, I will be needing them. I have a good CPA, and good relations with the local attorneys due to the real estate business.

I'm going to set up each business with it's own LLc. The taxes are confusing as heck.


I was originally planning on just letting my real estate office operate without having to pay a lease. CPA said that I should have it pay a lease for tax purposes. Just little details are dizzying.



Thanks to all for the post.

I'm going to just break down and call a shop out of town and try to discuss suppliers with them. Hope they are friendly...

vangogh
07-07-2010, 01:31 AM
They should be as long as you approach them right. One truism is people love talking about their businesses. If you can start the conversation with some kind of compliment about the other shop you have a better chance of getting information out of them.

Spider
07-07-2010, 10:04 AM
They should be as long as you approach them right. One truism is people love talking about their businesses. If you can start the conversation with some kind of compliment about the other shop you have a better chance of getting information out of them.But be careful. Don't make the compliment sound like you are planning to copy them.

Evan
07-07-2010, 08:01 PM
I'm going to set up each business with it's own LLc. The taxes are confusing as heck.

I was originally planning on just letting my real estate office operate without having to pay a lease. CPA said that I should have it pay a lease for tax purposes. Just little details are dizzying.

Thanks to all for the post.

I'm going to just break down and call a shop out of town and try to discuss suppliers with them. Hope they are friendly...

If the property is owned by one LLC, and is separate from your real estate business LLC, then yes, there should be a lease between the two businesses. You're dealing with two separate legal entities, and a binding agreement should exist. You wouldn't just let a tenant have space without a lease? Then why is this any different? Because it's you? No -- you want the paper trail!

vinese
07-09-2010, 12:10 AM
If the property is owned by one LLC, and is separate from your real estate business LLC, then yes, there should be a lease between the two businesses. You're dealing with two separate legal entities, and a binding agreement should exist. You wouldn't just let a tenant have space without a lease? Then why is this any different? Because it's you? No -- you want the paper trail!


Yea I was originally planning on giving the real estate a free ride, but after talking to my CPA that could cost me on several fronts.


ON A Side NOTE

I found my suppliers!! My dads secretary just bought a day care from a couple who also owns a chain of tobacco stores. She was just randomly discussing the transaction and how they were grossing 60k a month off of 1 tobacco store. That caught my attention :confused:

I told her to get them on the phone and find out where I can buy some product lol....

Within 5 minutes I had 3 different sources.


That's a start!

Now I have to start shopping the competition and seeing how the prices range.... Hopefully there is a decent margin to be made..

vangogh
07-09-2010, 12:44 AM
Great timing for you, huh? It's cool when things work out like that. Shows you that opportunity is always there as long as you're paying attention.

PizzaPie
07-09-2010, 02:25 PM
Wait outside that store down the street until the truck comes to deliver and get his card/ information.

vinese
07-09-2010, 08:29 PM
Great timing for you, huh? It's cool when things work out like that. Shows you that opportunity is always there as long as you're paying attention.

Yes indeed. I talked with the supplier today and they only need a copy of my tobacco license to get started. I don't have much to loose on this little venture. Space is there and I might as well try it.

The supplier said there was about a 15% margin on the tobacco products.

Sooo hypothetically...
Monthly sales $50,000
Profit margin (.15)
$7,500
Minimum wage -$2,088
$5,412
Assorted Exp. -$1,000
Lease (paid to myself) -$ 600
=$3,812 Net


Not getting rich but may be worth dealing with.

Evan
07-10-2010, 06:15 PM
Cost of Goods is 85%? That seems high, though I'm not aware of what the industry "profit margin" normally is in tobacco products.

billbenson
07-10-2010, 11:34 PM
You are probably looking for a master distributor for product, not the manufacturer. There are probably a bunch of them. I'd start by buying from whoever you can. Once you are in the business, you will figure out who will give you the product at the best price. Play a few against each other for a while to see who you can get the best price from. I don't mean "well I can get it from X supply for less" I mean shop price every time you make a purchase. Keep trying the suppliers you have talked to in the past and look for new ones as well.

That's what I'd do anyway.

semstar
08-02-2010, 08:34 AM
You are also very young (well, I say that -- and I'm the same age) and married. If you haven't dealt with this kind of exclusive management before, I hope you have a good attorney and accountant to help you with all of these businesses. It sounds like you have a lot of ideas, just make sure that each of these businesses have records that are tracked. The attorney will be good for drafting up any leases, and organizational paperwork that you may need.