Help! Is this a good idea?

[Akers_63]

I'm wanting to open a quick lube shop and the place i want to open it is perfect but the land is expenses. The average income in this town is $122,700 and there are no quick lube or repair shops within 15 miles. The traffic count is around 16,000 a day. The land is right over an acre and cost $455,000 so with all and all I would need to take a loan out for around $550,000-$650,000, will I be able to get a loan for that much? Would it be better just to do a long term lease with the option to buy?
This will be my first business but I have been an ASE certified mechanic and manger of a mechanic shop for the pass five years and want to start my own now. I also have an associates in business. I know this is a lot of money for a first business but according to my business plan if all goes right I will have no trouble making my loan payment and pay everything else. My boss always said "if you're going to do it you mine as well do it right." I could buy in a different place and spend half the money but I would not make near what I would at this location.
Any info or just advice will be greatly appreciated, thanks for your time.

[MyITGuy]

Personally, that traffic count seems low...sounds like a 1 lane road in each direction. Are there other alternatives in the same area, but on a more traveled road (I.E. 40K+)?

Regarding the loan, this would be subject to your personal credit history. Do you have great credit? Do you have clear/free assets worth 550K+ that can be used as collateral?

Also, have you wondered why there are no other shops in the area? With that type of average income I'm betting the owners have some mid/high end cars and likely would only trust them (or can only be serviced by) the dealer...which means you won't get as much business as you are hoping for.

[Wozcreative]

High end vehicle drivers usually own a car for about 2 - 4 years. If they own the car (and not lease), their maintenance like oil changes etc, are already included in the price of the car for up to 4 years. Most times it is more profitable to take a still new car and trade it in to get an even better car since the other one has still value. They would never go to another shop to pay for something they can get free. Maybe try a car detailing place instead.

Regarding getting a loan, most banks here can actually give you a good idea on the likelihood of you being accepted for a loan. They take down everything you owe already, how much you made in the last 2 - 3 years and then they average that amount. And based on that they can give you a percentage likelihood idea wether or not you would get accepted before you even put in the paperwork for the application. This is of course granted that you also have good credit history.

[Akers_63]

Its a new and up coming town thats why there are no shops, use to be all farm land but more people are moving out there from the city. Four lanes + of traffic usually is not good for a quick lube because people only stop if its convenient to stop there. The shop I work at now does a large number of cars from that area and I know they would go to one thats closer.
Would it be better to try and lease the land or buy?

[MyITGuy]

The shop I work at now does a large number of cars from that area and I know they would go to one thats closer. But would it be convenient for them? I.E. Whats around the current shop that you work at (Coffee shops, diners, shops and etc.). Are these same places around the land your looking at?

Me personally, I take my car to a place off a 3 lane road that has plenty to do within walking distance. I.E. I can drop off my truck, grab a bite to eat for lunch and pick it up when I'm done.
Plus, there is a good car wash across the road I stop in at every now and then.


Would it be better to try and lease the land or buy?I'd say lease would be a better position from a risk standpoint, rather than being stuck with a mortgage for 15+ years. Especially if you don't have credit/assets.

[Freelancier]

Yes, lease. You may not even look to own the land, but leasing it with an option might be a good starting point for discussion. However, the landowner might want to just sell it out entirely, which means you'll need to find a real estate investor willing to foot the bill for buying it and then leasing it back to you.

[Wozcreative]

It would probably be simpler to lease it out first for sure. Talk to an agent.