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I wnt to move from hobby to commercial - next investment

Discussion in 'Pro Audio Equipment' started by Larry Sheehan, May 7, 2001.

  1. I'm ready to pack in the day job, and part of the retirement package gives me a lump sum of about 35K. I'll have a pension that I can live on. I can invest about 25K of the lump sum.
    The decisions I'm faced with:
    1) I have a space 20x24x9 which I'm using now as a combination control/tracking room. I could build a new space adjacent to the current space, and achieve a dedicated tracking room of approx22x20xup to 12 feet w/vaulting the ceiling.
    2) I could spend some time looking, and maybe use the 25K as down payment to buy a small strip mall and build a studio there.

    I can see pros for both ways.

    Building onto my house, I'm kinda constrained by the existing structures to the size I mentioned, but, I'd be able to do the work myself for the most part, leaving me cash to invest in better pres and comps which I'd like to do. I also don't need to invest in a lounge/kitchen since the house is just me and I own it free and clear.

    Buying the strip mall, the theory is that I cover the mortgage and hopefully a bit of profit. I think it also may enhance the credibility, but that's just a hunch. In the meantime, I've got the landlord headaches and I'm now trying to run 2-businesses.

    I lean towards building onto the house, what would you do and why? What else should I take into consideration?
     
  2. Ang1970

    Ang1970 Well-Known Member

    Joined:
    Sep 5, 2000
    Ok, my $0.02

    House scenario:

    What is your overhead operating at home? Even tho you don't pay mortgage, you still have to pay taxes, utilities, insurance and eat... does your pension cover all that?

    How busy is the studio right now? Are you already turning a profit?

    If you stay in the house, you'll still have a house at the end of the day. You can continue working in a familiar and comfortable environment, on your own terms, and you can keep feeding your gear addiction with even a modest profit.

    Strip mall scenario:

    How much need exists for a strip mall in your area? (And if so, will it be possible to find one for a reasonable price?)

    Are you sure you will quickly get enough tenants to cover the entire mortgage?

    For commercial credibility, you should build your room "the right way", which means some serious $$$ in addition to whatever you will have to lay out for the rest of the building. You could save up for the renovation $$$ over time (and maybe never get there), or you could just plug everything in and do it ghetto style (negating the commercial credibility factor). Or... you could take an extra $100,000 (or 3) on top of your mortgage so you can do the renovation right away and do it right. Hmmm... Will need twice as many tenants to cover the mortgage.

    Keep in mind, you will be responsible for making sure each shop has utilities in order. So when a pipe bursts, or the heat goes out, or birds peck a hole in the roof, it comes outta your pocket. Having a buffer of at least $5-10k in the bank at all times would be prudent. Don't read any more gear reviews, lest ye be tempted to run out and buy that new mic/comp/eq/pre/sl9000j/etc. with your maintenance kitty.

    Is there enough demand for a commercial studio to be worth all that? (Didn't even get into what kind of clientele that kind of studio will attract.)

    These are just some of the questions I would ask myself in your situation. TTFWIW.
     
  3. Jon Best

    Jon Best Active Member

    Joined:
    Mar 18, 2001
    I'd be leaning towards the house scenario myself, unless you're experienced in property management and just *know* the strip mall is a good investment, studio notwithstanding.

    There are still some things to think about, though- first and foremost is zoning. Some local codes limit the number of clients at one time in a home office to 1 or 2, or limit noise and traffic. You may be able to get some sort of individual waiver or something. Tip- have a friend be the one that goes down to the city first, and don't let him give your address- if you do, they will write it down, and you can't say 'didn't know' later on, if you need to...

    You also have to think about soundproofing now, before you do any building- a well done studio will cost more than a regular structure, and there are a lot of pitfalls where you can screw up the construction and negate most of the benefits of heavier building. If you know masonry, grout filled block is probably the best. Either way, house or strip mall, you're going to want to keep traffic sound out and music in.

    Originally posted by Larry Sheehan:
    I'm ready to pack in the day job, and part of the retirement package gives me a lump sum of about 35K. I'll have a pension that I can live on. I can invest about 25K of the lump sum.
    The decisions I'm faced with:
    1) I have a space 20x24x9 which I'm using now as a combination control/tracking room. I could build a new space adjacent to the current space, and achieve a dedicated tracking room of approx22x20xup to 12 feet w/vaulting the ceiling.
    2) I could spend some time looking, and maybe use the 25K as down payment to buy a small strip mall and build a studio there.

    I can see pros for both ways.

    Building onto my house, I'm kinda constrained by the existing structures to the size I mentioned, but, I'd be able to do the work myself for the most part, leaving me cash to invest in better pres and comps which I'd like to do. I also don't need to invest in a lounge/kitchen since the house is just me and I own it free and clear.

    Buying the strip mall, the theory is that I cover the mortgage and hopefully a bit of profit. I think it also may enhance the credibility, but that's just a hunch. In the meantime, I've got the landlord headaches and I'm now trying to run 2-businesses.

    I lean towards building onto the house, what would you do and why? What else should I take into consideration?
     
  4. Guido

    Guido Guest

    IMHO....keep the cash and keep the space you have. If you MUST buy any property, invest in a parcel that'll have a better chance of turning a profit on your investment in 5-7 years. A strip mall? I dunno.... A commercial recording studio? Well, here in Nashville, where there is a MUSIC BUSINESS....studios are dropping like flies. Just my opinion....
     
  5. All good points! Thanks. I guess I was hoping to be talked out of the strip mall idea, since it's a relief to read some well reasoned arguments against it.

    Re: Ongoing expenses, I can live and pay all the household operating expenses on the pension without getting into savings. That should stay true for 10 years until inflation catches me, then social security (if it's still there) and savings will cover the shortfall. Turning a profit - mwahhaaaahaaahaaa. I've sunk tons of money buying the gear I've got and don't have a prayer of recovering it. I just need to feed the GAS habit from the studio income when I retire and keep the pension for living on.

    Re: Zoning, I'm in an unincorporated area. I was shocked when I moved here to find that there was no zoning here, no building permits either! So that works out OK.

    Re: Soundproofing, I think since i'd be building onto the house, and since I may need to resell at some point, I have to preserve the aesthetics of the house. If I did resell, I'd feature the tracking room as a gameroom. I think I'd need to go staggered studwall and/or room within room style to keep the residential appearance for the future. Fortunatelty the house is on 5 acres on a private road. Ambient noise level outside is 50-55dbA (I just measured it). A small plane flew over and it was 65 outside and 50 inside in an untreated room. I'm about 150' from the road. Inside it doesn't register on my radio shack SPL meter. I'm over 150' to the nearest neighbor so exfiltration isn't a major issue either.

    I've been reading Alton Everest's books, Building a Small Budget Recording studio and Sound Studio Construction on a Budget and the doubled walls technique looks viable, especially since the space I'm using now has nothing special for soundproofing.

    As to demand, and competition; The Austin area is full of guys like me who are trying to live their dreams. I'm north of Austin and well situated to attract clients from Killeen and Temple. Tons of bands around here looking to get a good demo, and self procuded CD to sell at gigs. I'm getting a slow buildup from word of mouth, but it's gonna take time before I get busy enough to break even. I'm prepared to put the time and money in anyhow.

    Thanks for the reality checks, I've just got to take my shot...maybe commercial is the wrong term for what I think I'm trying to do. I just want to get to where I'm booked 15-20 days a month working with unsigned acts. I don't think it's realistic to expect more than that when I'm getting into this at this stage of my life. I don't want to get rich (good thing huh?) doing this, but I love engineering. It gives me shivers to hear what I've recorded when I've gotten everyting right.

    I hope this didn't come off sounding arrogant. I really appreciate the input.
     
  6. Jon Best

    Jon Best Active Member

    Joined:
    Mar 18, 2001
    You may want to check out studiotips.com, which also has a link to a good acoustics digest. Worth looking at/posting questions, etc.

    Originally posted by Larry Sheehan:

    Re: Soundproofing, I think since i'd be building onto the house, and since I may need to resell at some point, I have to preserve the aesthetics of the house. If I did resell, I'd feature the tracking room as a gameroom. I think I'd need to go staggered studwall and/or room within room style to keep the residential appearance for the future. Fortunatelty the house is on 5 acres on a private road. Ambient noise level outside is 50-55dbA (I just measured it). A small plane flew over and it was 65 outside and 50 inside in an untreated room. I'm about 150' from the road. Inside it doesn't register on my radio shack SPL meter. I'm over 150' to the nearest neighbor so exfiltration isn't a major issue either.

    I've been reading Alton Everest's books, Building a Small Budget Recording studio and Sound Studio Construction on a Budget and the doubled walls technique looks viable, especially since the space I'm using now has nothing special for soundproofing.
    .
     
  7. RandomGuest

    RandomGuest Guest

    Joined:
    Feb 10, 2001
    Larry- Your situation sounds very similar to Harvey Gerst's. I don't know if you've asked this question in his forum, but perhaps you ought to. Maybe you might want to have a sit down with him to discuss it. He's a very knowledgeable and wise man, his guidance may be just what you're looking for.

    As for doing the studio thing to actually make a living? Forget about it. As for making your hobby your job? Think about it. At the moment 'recording' is fun, it gets a whole lot different when you're working a commercial studio.

    There are bills to pay, deadlines to meet, cancellations to fill, collections to make, taxes to be paid, general overhead expenses that will be incurred whether you sell time or don't. As an investment, a "recording studio" is right down there on the bottom of the list for any ability to recoup your investment, unless you do it at the very highest, or very lowest of levels.

    If all the 'equipment' is paid for, and you don't have any 'zoning' issues, then it's probably best to invest the capital improvement into the house...but you probably won't recoup the entire investment when you go to sell the place unless you happen to run into another guy that wants a studio in his house.

    The "strip mall" idea will cost you a shitload more money to "build out", as you'll have the noise of other business, trucking, etc. trying to get into your place, and will have to keep the noise generated by your studio out of the other tennants space.

    If you want to get into 'real estate development' as your next career, then buy a strip mall, or develop some "McMansion/Gated Community" or whatever you feel like. Trying to run two businesses at the same time usually means that both will fail.

    I sincerely wish you all the best of luck with whatever you decide...but you sound like a young man [I'm guessing 50-ish?] who has many more years to be productive. There may be a million and a half bands in your immediate area that all want to be recorded, but you'll soon learn that most of them suck...and sitting around 60-80 hours a week listening to shitty bands and people that can't play is a fuckin' drag on it's best day, and may give you the temperment of a pissed off postal worker on some other days.

    Again, best of luck.
     
  8. Thanks, Fletcher. I appreciate what you're saying qabout hearing tons of crappy bands. Yep I'm 51, and right now it's hard to imagine that recording as close to full time as I can get is going to be worse than "Managing the Customer Relationship to Leverage IBM's Assest and Maximize Customer Satisfaction" has been for the last 31 years.

    Without needing to do more than break even from here on out, I'll continue to be selective about who I get involved with.

    Thanks for the tip on contacting Harvey. I don't know why I didn't think of him. I've got his Email.
     
  9. Jay Hudson

    Jay Hudson Guest

    Larry,

    You could consider investing your talent and money in an association with an already established commercial studio. Great productions are always a result of teamwork and collaboration.... Just another angle to ponder.
     
  10. Jay, I accept your gracious offer <G>
    Seriously, I've thought of that, if you're more that half serious we need to talk. My brother has a 16tk analog studio in NY, and he's thinking about throwing in with me, but I don't think he's going to be able to take the heat here.

    If you know of someone else who'd be interested, I'd love to get in contact with them.

    I'm pretty well equipped but need world class pres and comps. And a good sounding room is the major drawback I've got right now.
     
  11. Jay Hudson

    Jay Hudson Guest

    I'm sure Fletcher could fix us up.
     
  12. I bet he'd be delighted to.
     
  13. Jay Hudson

    Jay Hudson Guest

    Fletcher, delightful?
     

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