I’m mulling over a business model for portable sheds. Looking for feedback.
I have a underutilized commercial property in town with 5-10k traffic count. It’s 2.2 acres with a ton of frontage, in a flood plain, and had an old mobile home on it. Mobile home is rented. Eventual goal is to sell for a profit to someone for a commercial development, or do it myself.
I am thinking about setting up a small franchise selling sheds. The company will own the inventory and pay for marketing material. I would earn an 8% commission. They have an in house company set up for leasing. I would be allowed to purchase sheds and lease them myself with my money. They feel my location will bring about $35-$40k in revenue, or a commission of $3k/month.
None of this excites me too awful much, although it seems like relatively little work for a modest benefit. My thought is to find someone to sell these for me and offer a commission of maybe 5% to them. I’m not making much of selling sheds, but if someone wants to rent one, I can buy a shed and have it delivered there. It seems like I can rent it for about 4% of the purchase price. I would need to charge an up front cost equal to the delivery cost and pickup cost, then lease it month to month after that.
Seems like a relatively low investment for a modest return and something that will fit well with my rental properties. I have an online payment system set up, and some subs, property manager, etc. Thre would be no property taxes and little maintenance needed. I figure the life of a shed would be about 10 years, and I may keep 2-3 different models in inventory.
For example, a 10x16 shed costs $3300/ Delivery would be $75 and $75 to pick up. I would rent it for $125/month with a $150 up front payment. This is about the rate for a storage unit, and it’s much more convenient to use.
The only thing it doesn’t cover is damages from a tenant. Not quite sure how to address that. Maybe just force them to pay with a card and keep an active card on file for damages. I don’t feel I could get more deposit.
I think it’s a good idea. I have seen that in urban areas - land in a 100 year or less flood plain, even if its commercial and directly on a highway, will never be worth much unless you can build it up so that its usable. And that requires the work of an engineering firm, the city your land is in and FEMA. The government has weird laws regarding flood plains…for example - you cannot modify your flood plain property so that it worsens the surrounding flood plain or non-flood plain properties, and that’s when the engineering firm will come into play. Now if this is in a rural area or in a 500 year flood plain … it may be a whole other animal.
Business wise - I think you should go for it. Just make sure you have insurance (flood insurance too, haha). Vacant flood plain land that does not flood often, can be used for crops, Christmas tree sales, a tree farm, firewood sales, a soccer field / park, selling portable buidlings or pools/spas, and all kinds of things. BUT…personally…I’d stay away from leasing the buildings. I’d just sell them, and charge for delivery as needed.