All Forum Posts by: Jason Turgeon

I'm by no means an expert at this, but in my metro (Boston) I did a search a few months ago and only found a couple of locations that were true for profit kitchen rental spaces.  Seems odd to me that there isn't more demand for this kind of thing. I found out about this from a coworker at my day job who quit our company to start a full time baking business (wedding cakes, mostly). She was able to find a small kitchen space at a price that allowed her to make the jump. 

At least here in Boston, there seem to be a fair number of nonprofits geared at trying to help struggling young entrepreneurs in the restaurant space get started. Hard to compete with a nonprofit, but they often have all sorts of restrictions that might make them unappealing to certain clients. There are also a lot of struggling restaurants right now offering use of their kitchens at odd hours or slow days just to get some extra cash in. For someone who isn't doing takeout (like my baker friend), this might be a better deal. But I still think a true ghost kitchen space in the right location could do well. 

Here are some market research starters:

There's this place with a slick website but no info about their locations (not even a state!: https://www.cloudkitchens.com/

Then there is this website that lists kitchens for rent, including lots of the struggling restaurants offering "dark space" I mentioned: https://www.thekitchendoor.com...

Here's the one true kitchen landlord I found in my metro: https://www.gatehousekitchen.c...

As far as logistics: Startup costs seem high, and I think you would really need to know what a startup restaurateur needs in a kitchen, especially in covid where things like shared storage and shared bathrooms aren't as appealing as they were a year ago.  But on the other hand, it's dirt cheap to buy used kitchen equipment from closed restaurants right now. Some of these places seem to be offering much more of a full service offering with tech platforms and even staff who help in the kitchen. Sounds more like a job than a passive investment to me. And you will have loads of permitting to deal with since you are talking about food, so be prepared for delays and unexpected costs. 

If you have the capital and RE experience, you could try finding a few people who want this kind of space in your area and getting them to sign some sort of LOI or nonbinding agreement that you could then take to a lender when you go looking for a space. But I would want to be sure that if the ghost kitchen thing disappears after we all have vaccines next year that you have some kind of fallback plan for the space. You could probably do a master lease and then sublet the space, but I think I would prefer to own the space so I could sell if the business model doesn't pan out.

Let me know if you pursue it. I think it could work out for the right person in the right market. 

Hi @Allan Henry, I'm looking into commercial condo development here on the east coast. Slightly different animal since I would be converting older industrial space. If you're still on the forums I'd love to chat about your experiences.

@Kyle H. thanks, that makes a lot of sense. The space for cranes probably also explains why we don't see much urban infill modular building even though people are desperate for more affordable housing and quicker construction timelines in the HCOL cities. 

@Kyle H those are some big savings. Seems like a no brainer, but then you and lots of others are still doing stick builds elsewhere. How do you decide where to deploy one vs the other? 

Still enjoying this. Always cool to learn about different construction techniques. The photos you linked give an error message when I click through, looks like some kind of forum we need to be members of to see the pics.

I am exiting a 22 unit apartment building in Texas. I made more money on my 2-family in Boston and I make almost as much on a 2-family I have in the same town in Texas run by the same property manager as the 22 unit. This size building turns out to be hard to manage and generally unprofitable. Too small for full time on-site salaried managers, but sucks up a huge amount of time if you DIY. So you hire a PM, but they're expensive. Plus these size complexes tend to be older and have fewer amenities and be in less desirable neighborhoods, so you automatically get a lower class of tenant. And there are fewer buyers when you want to unload. I found it to be a lot of headaches for not enough money, so I am going back where I am more comfortable. Buyer beware. 

But if you want to scale, I'd say this size building is likely a necessary stepping stone/learning experience for you to get up to the 100+ unit complexes where management gets easier because you can dedicate someone to it full time and tenants are better because you are dealing in nicer properties in better locations. Just choose wisely, because you want something you can get out of when it's time to move up. And be prepared to not make as much as you're used to making.

For money, do you NEED the silent partners, or can you come up with 25% down plus some costs on your own? If you don't need partners, it will be easier. Just go to your local small town bank or credit union and tell them what you want to do. Read up on how commercial loans differ from standard residential loans first. Don't bother with big banks, they won't give you the same service. Be prepared to bring a business deposit account with you.

If you do need the partners, follow the advice others have given you about syndications and so on, then be sure your lenders know that you will be bringing in partners. Adds a lot of complexity, so be sure it's worth it. 

@Kyle H. curious as to why you switched back to modular. Seems that by the time you do site work, foundations, and electrical it can't be much cheaper than conventional building. Is there some advantage to it that I'm missing?

Thanks for putting so much detail into this thread! I live in the congested East Coast where finding an 8 acre site is more or less impossible, and if you can find one it will go to a 9 figure development with hundreds of high end condos. But it's interesting to learn about all the site work and engineering and everything else. 

It's also interesting to note that no matter how long someone works in this business, their best estimates about time and cost never seem to work out. My first rehab I remember sweating $400 cost overruns. Then I moved up to sweating $4000 cost overruns. This year I had a $40k cost overrun and made it work. And you are dealing with a $400k overrun and it seems like it is causing you about the same stress. Guess I know what to aspire to!

16 of 24 in my TX properties have paid.

Of the 8 that didn't:

• 1 vacant (10 weeks and counting)
• 1 tenant unfortunately passed away last week. Still don't know the circumstances.
• 1 tenant was 2 months behind and abandoned the apartment last week. Hoping to get that turned around quickly and get a paying tenant in there.
• 2 tenants who are chronically late and missed March 1, but evictions were halted by mid month. These 2 get the boot as soon as it's legal. I'll never see a dime of what they owe me.
• 3 tenants who are usually on time but haven't paid yet. These are the ones I'm worried about. Good people who are in trouble. 

In my Boston rental, all 4 roommates are current. That includes the one who got laid off early in March and missed April rent entirely. He borrowed money from family and paid me for April and May even though I told him he could wait until he was finally able to get through to unemployment. He has been unable to get through and hasn't seen a dime in any kind of aid in spite of being out of work for 7 or 8 weeks at this point. 

So of 28 rent payers total, I am running at about 10% above average that aren't able to pay on top of 10% vacancy, coupled with a couple of people taking advantage of the eviction freeze. 

Hopefully the situation improves soon, I have about $31k of tax and insurance bills coming up and will have to dip into reserves to cover them since cash flow has been hit so hard these last couple of months (also had a few 4 figure repairs in a row hit at bad times). 

@Clint G. my 2-unit is in Nederland, the larger property is in Beaumont. I have a guy I generally consider to be a fantastic property manager. Not sure what is going on, but he is telling me showings are off by 75%. The class C property in Beaumont I am working on turning over to fully section 8 housing so it doesn't worry me as much to have vacancies there right now. But I never figured the gut renovated property in Nederland would be vacant for 10 weeks and counting.