Ok, so an opportunity has come up to purchase another storage unit in my lab building, on the same level opposite my existing dungeon.
In fact it's the 2nd time it's come up for sale, and it's now $20k less than what he wanted for it before, and I passed on it last time as not being good value.
Here is the situation:
- I own my 50sqm lab, currently a complete mess with crap everywhere, and dedicated packing and shipping cubicle.
- I own my 42sqm storage Bunker in another part of the business park. Currently just filled with crap and stock and things like the Indiana Jones train set and Sinclair C5 and tons of storage boxes, vintage computers, and personal storage from home.
- I own my 31sqm storage Dungeon in my building, currently chock full of stock, some test gear, and shelves and two work benches.
- The available storage unit only 26sqm and is 1.8 times the price of the 31sqm dungeon, or 2.15 times the price / sqm of what I paid for the Dungeon. I won't say the price, but the dungeon was 5 figures, and the new one is into 6 figures.
So I'd have the swallow my pride and know I'm paying WAY more than my bigger Dungeon, which admittedly I did get for an absolute bargain. Still, in terms of pricing for the park, it's still quite cheap.
- Storage units in my park are rare, let alone ones in my building, and let alone ones that are free-hold strata title (i.e not tied to owning another office in the building)
- I can't really move into one bigger consolidated space because that would cost $800k-$1M, not to mention having to sell and incur a lot of capital gains tax selling my current places, and not being as good a location.
- I have the available excess cash to buy it currently sitting in a cash investment account earning 4% or something, so basically zero impact on my business cash flow.
- Ongoing cost is only a few thousand per year in strata fees and council fees. Current Dungeon is $2836/year in strata, so this one would be a bit less because it's smaller. But I do get some tax offset in capital depreciation. So cost to maintain is down in the noise of my expenses.
- Practically zero risk the unit will drop in capital value. Other storage units in the park have gone for way more/sqm
So ultimately it's just a simple opportunity cost thing. Do I buy the unit and forego say 4-5% yield (potentially more if I invested in other stuff) and pay out a few grand a year and get a another space to use. Or do I pass.
Let's ballpark it at say net $7k/year for this unit. There is nothing else in the park I can get remotely close to that amount. A small 30sqm office space would be $15-$20k/year for example, plus strata.
If it was the same price as my Dungeon I'd buy it in a heartbeat.
What would I use it for?
I don't just want to collect more crap, so I'm thinking about turning it into a recording studio. I could kit it out with a huge backdrop, lighting, sound proofing etc.
I would even have some room for some more rack storage in there as well to get more space in the lab.
Or I could use this new smaller space for purely for stock and equipment storage, and then kit out my bigger Dungeon as a dedicated studio and work space. Come to think of it, that's probably better.
For those who don't know, I have a ton of stock for my store, so much so that's it's split over both the Dungeon and the Bunker.
Yep, I know I'm basically at the point of collecting sub-optimal spaces expanding my dinky windowless 50sqm lab instead of biting the bullet and getting one big space, but the price of big places is through the roof in this park. So it's either take out an expensive loan for $800k+ or sell all my places and incur a huge capital gains tax bill. Both of those solutions suck. And my current location is the best in the park.
Thoughts and comments appreciated. Thanks.
I don't have photos, but it's the same as the dungeon, only smaller: