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John Yoswick

John YoswickJohn Yoswick is a freelance automotive writer based in Portland, Oregon, who has been writing about the collision industry since 1988. He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com).


He can be contacted at john@crashnetwork.com 

Tuesday, 06 April 2021 21:52

Deciding Between Leasing and Purchasing When Adding Shop Locations

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John Walcher, top left, of Veritas Advisors moderated a panel discussion on real estate issues related to growing collision repair businesses. John Walcher, top left, of Veritas Advisors moderated a panel discussion on real estate issues related to growing collision repair businesses.

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Here’s a tip: Investors might be interested in buying your shop’s real estate.

Gary Chou, executive vice president of commercial real estate brokerage firm Matthews Real Estate Investment Services, said outside investors such as real estate investment trusts (REITs) have recently begun to see collision shop properties “as a legitimate investment product.”

 

“That’s helped push values of collision properties up, because it basically increases the buyer pool overall,” Chou said.

 

Chou was speaking last fall during the first MSO Symposium panel discussion in the event’s nine-year history focused on issues related to real estate---and the speakers focused on some topics that could be equally of interest to single-location collision repairers as well.

 

The new interest among investors in body shop real estate, for example, offers another option for a shop owner who sells the business to a large MSO---which is unlikely to want to buy the real estate---and wants to cash out the property rather than continue as landlord.

 

Much of the discussion centered around whether a collision repairer adding a shop location---whether a second or 16th---should purchase or lease the new location’s building and real estate.

 

Chou said smaller MSOs often view the purchased land as “a retirement play,” while larger MSOs consider “efficiency of capital”---what will get them a greater financial return.

 

“There’s no right or wrong,” said Chou, as long as someone purchasing considers whether they would do better freeing up that money to open additional shops.

 

Will Johnston, chief corporate development officer for Service King, agreed there’s not one definitive answer to the purchase-vs-lease question.

 

“It really depends on where you are in your growth and how aggressively you’re growing,” Johnston said. “You may decide that your pace of growth is such you want to lease that property because you want to save capital to go after additional shops. But if...


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