Business expansion? New office space for growing flip company

[Gus Muller]

Our company has outgrown our small single room office space (2 years there currently) and we are considering leasing a space with a 5 year term. I have concerns with COVID as I believe the commercial market will soften. I don't really want to buy a commercial space right now either (too much cash down, responsibility, build out, etc). We can't continue to operate and keep on pace for our growth out of the small office and my garage.

The leasing option we have on the table is a premium central location and should be large enough to expand into for future needs. It has 5 offices, conference room, reception area, center "war room", bathroom, small kitchen, total of 1,964 sqft. Plus an additional 268 sqft heated shop space for building materials and tool storage with overhead door. No build out needed, but we will have to furnish. It really is perfect, and expensive ($3,100/month+internet/utilities). Our current office is around $1,100/month.

We have purchased and rehabbed 11 properties this year with an average of around $45K/flip. We have also expanded into the realty side of things for the leads that we can't make a deal on, now offering full service MLS listings through our brokerage. Our plan is to scale the flipping side of things to 24+ houses in 2021, along with snagging public MLS listings along the way.

I am scared of the 5 year lease term. We can sublet in a worst case scenario, and the company that handles this commercial property has a lot of options to trade-up if more space is needed after we meet the 3 year threshold. We haven't been able to find any reasonable and turn-key space that will consider anything less than a 3 year term, and we don't have the time to build out as the leads and volume of what we can buy are stacking up fast and our main focus needs to be on producing income.

Our staff currently consists of 7, some full time some part time (myself, transaction coordinator, office manager, project manager, business development, general laborer, and one real estate agent).

Should we put on our big boy pants? I can't imagine we won't have a better experience in the new space, and close many more flips. We need the organizational space, and I think it would greatly increase company morale, accountability, efficiency, lead generation, networking, etc. We can afford it.

If anyone has some advice, or possibly knows anyone who could mentor me through this I would greatly appreciate it. Thanks!

Gus Muller