It takes a village to buy a building

|  August 25, 2017

As of July 2017, the new Schopen Pest Solutions building is very much a project in progress.
Photo: Pete Schopen

In my June and July columns, I detailed the process Schopen Pest Solutions went through to purchase a new building for its headquarters. And let me tell you, I couldn’t have gotten through it alone. I had a lot of help.

When I really knew I wanted to buy a building, the first person I contacted was my accountant. Ron has been with me as a client for the past 10 years, and he has been my accountant for the past three. He is my go-to person whenever I have a financial or business question. Everyone has that go-to person: For some, it’s their lawyer; for others, it’s their banker. For Nicolas Cage, it’s a Magic 8 Ball (“What role should I take next? ‘Ghost Rider IV’? Perfect!”).

Ron and I examined Schopen Pest Solutions’ profits for 2016, and how the taxes on the profits would affect my ability to buy the building. After Ron gave me a ballpark figure on where I was sitting financially, he and I called my banker, Dave. Years ago, the three of us were part of a networking group, and I felt comfortable with these two gentlemen and the advice they were giving me.

We discussed the situation via speakerphone in Ron’s office, and we concluded I could afford to buy as long as the price was between $250,000 and $280,000, and I could secure a Small Business Administration (SBA) loan.

Later, I met with Dave again and went over the process of getting the SBA loan. While we were meeting, he gave me the phone number of a commercial real estate agent whom he trusts. Joe B. is old school real estate — he knows everyone. I pride myself on knowing a lot of service professionals in various industries, but Joe is the Don King (minus the hair) of real estate. There isn’t a hand he hasn’t shaken or a phone number he doesn’t have on speed dial.

Joe walked me through the whole process of construction loans vs. traditional loans vs. line-of-credit, echoing many of the things Dave had already gone over with me. He met me at the properties I wanted to buy, and gave me his opinion on the condition of each of the buildings. Not only that, he helped me sell several large kitchen items I took out of the building I purchased, a former grocery store.

Joe in turn hooked me up with a general contractor. John looks like the love child of Paul Bunyan and Tom Hanks. He is rugged and handsome and his hands are rough and callused. He looks like someone who has been swinging a hammer his whole life. If first impressions matter, then I was sold on John at the very first meeting.

John’s cohort in crime is Larry the Architect. Larry is incredibly passionate about his job. His blueprints were so precise, he had little tables and chairs on the graph paper to show me how my offices should be laid out. I never realized the “layers” blueprints come by. You have the open space graph, the electrical graph, the plumbing graph, the drywall graph, etc. Larry and John were great and very patient with all my questions. I visited the building with them at least five times over a six-week period.

After another visit to Ron’s office, he introduced me to Joe G., our future attorney. Joe and his staff are always just an email away, and they respond quickly. If I had a question about property taxes, boom, they handled it. What title company are we using? Boom, they handled it. Why does this document say 2016 when it is supposed to say 2017? Boom, they fixed it. I’m currently buttering up Joe to let my 19-year-old future lawyer son work in his office next year.
 

Lessons learned

Nothing is smooth sailing all the time, of course. There were some hiccups in the process:

  • I naively thought my architect fees would come out of the construction loan. Nope. It cost $5,100 out of pocket.
  • I thought my property taxes were paid for 2017. Nope. They were credited to us at the closing — which brought the loan amount down, thus allowing us to pay less of a down payment — but the $6,100 tax installment came out of pocket.
  • I thought my building permits were part of the original building budget. Wrong again. It cost another $1,700 out of pocket.
  • Soil samples are paid before the closing: $3,100.
  • Appraiser fees are paid at closing: $2,500.
  • The check from the restaurant that bought the kitchen equipment bounced. Joe B. is getting us a replacement check as I type this.

The demo work is done, and now workers are putting in the plumbing and wiring. We just made our first “draw” out of the construction loan for John the contractor: $25,000 (gulp!). Soon they will be building our kitchen, conference room and offices. The whole project, including a new $35,000 parking lot, should be complete by Oct. 15. My entire staff is very excited, and I am, too.

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