The benefits of passive income

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Shop: Class A Body Paint & Repair

Owner: Narish, Rosanna and Greg Ramkissoon

Location: Kissimmee, Florida.

Number of staff: 5

Store size: 4,300 square feet

Average monthly number of cars: 15-25

Number of DRPs: 1

Annual income: $225,000

The idea of ​​passive income doesn’t come up often on the pages of FenderBender – after all, collision repair is an action profession, taking something damaged and fixing it.

However, the collision repair business goes far beyond bumpers and panels. Body shop owners and operators have goals for profitability and sustainability, just like any other entrepreneur. Some passive, almost guaranteed income can be useful in just about any situation.

That’s at least part of the thinking, says Greg Ramkissoon, vice president of A Class Paint and Body Repair, behind his family business’s move into property management.

One class, located in Kissimmee, Fla., about a half-hour south of Orlando, recently moved into a 7,700-square-foot building that the store had custom-built. The body shop takes up just over half of the building, renting out the rest to two other businesses. There is this passive income.

“We know the struggle, and it’s not every month that you make money,” Ramkissoon says. “Having property management [in the mix], it is a constant amount of money per month. And if you do it the right way, it will pay all the bills and whatever you get from the body shop will be direct profit.

Build with a plan

Ramkissoon co-owns A Class with his mother and father, Rosanna and Narish Ramkissoon. He says his father is from Trinidad and Tobago, where he learned to be a bodybuilder, doing carpentry, panel replacements and heavy welding.

Narish landed in Kissimmee via Boston, working in various body shops along the way, before opening Class A in 1996. Ramkissoon says his father continues to paint while his mother takes care of the accounts. The store staff is supplemented by Ramkissoon, who sometimes steps in to help with the paint job when he’s not running the office, alongside a bodyman and a picker.

A class started in a 1,000 square foot space before landing in a new location with 5,000 square feet at its disposal. In both cases, Ramkissoon says, the company leased, and after two decades of doing so, its owners began to seek more control over their facility.

Knowing that impact fees — the one-time cost to the city or county to connect a new building to power and sewer — could be a significant barrier to building their own facility (see box below), Ramkissoon says he and his family first looked for an existing space to buy.

However, when those efforts proved futile, he says the focus shifted to building a custom facility, while planning to build it larger than needed for the body company, break it down and to rent this additional space.

BOX:

Impact fees have an impact

Greg Ramkissoon is co-owner of A Class Paint and Body Repair, which operates out of a building he and his family had built for the business. The store only takes up about half of the building, while the rest is leased to two other businesses.

Having gone through building a custom body shop space, Ramkissoon’s advice to potential builders is to be aware of impact fees.

“They were a shock,” he says, explaining that impact fees are the one-time costs for local governments to provide utilities to a newly developed property.

Ramkisoon says that in Florida, where his family’s store is located, fees can reach $20,000 and more.

They’re an important factor, he says – so important that Class A first sought to find an existing facility, as opposed to building, in order to avoid the impact fee.

enough to pay for it all

One class moved into its purpose-built facilities three years ago, Ramkissoon says, with the construction process itself taking two years. Those two years of construction, he says, have provided their own lesson in how not to own (see box below).

Located approximately 10 minutes from its previous location in a low-crime area, the new building spans 7,700 square feet, with Class A occupying 4,300 square feet.

Ramkisoon says the remaining 3,400 square feet are leased to two companies, an importer of Japanese right-hand drive vehicles and a polishing and powder coating company.

Ramkissoon says the tenants were referred by friends, and by leasing the extra space at a going rate of $2 a square foot, his family’s plan to get into property management is going well.

“At that price, it’s enough to pay for everything,” he says.

BOX:

How not to own

A Class Paint and Body Repair has built its current facility with additional space that it leases from other businesses.

Co-owner Greg Ramkissoon said construction took two years, and during that time the store continued to lease space. He says those 24 months have become a solid lesson in how not to be a landlord.

Ramkissoon says the former owner of his store got wind of his plans to move on and put the screw on the business, first terminating the existing Class A lease and putting it on a lease monthly.

Towards the end of that two-year period, he says, the previous landlord then began raising the store’s rent, culminating in the rent quadrupling in the last month the store rented space from the company. .

“When you’re building a property and renting at the same time, it’s tough,” Ramkissoon says. “We had to use all of our profits just to keep the doors open.”

About three years after moving the store to its own space and starting to run its own property with two tenants, Ramkissoon says he’s not following his former landlord’s lead. On the one hand, he says, he’s a lot more forgiving.

“We don’t want to follow their ethics,” he says.

A good safety net

So far, says Ramkissoon, the biggest surprises of being in property management have been the little things tenants often don’t have to worry about — keeping things like fire extinguishers up to date and maintaining the exterior appearance. of the building.

“Now I understand, it’s me,” he said. “I’m the guy outside picking up all the trash.”

In addition to no major issues from its tenants, Ramkissoon says Class A is also firmly on its honeymoon with its new facility.

“Everything is new, so nothing is broken yet – in about 10 years, that’s when the AC unit fails,” he says.

Likely before Class A needs to replace its air conditioner, Ramkisssoon says the store is heading for growth.

He says Class A recently became an Auto Repair Xpress shop with GEICO, and that could mean hiring more help for the shop, without expanding its current footprint.

There’s also the possibility of another build and expanding the property management aspect of the business, Ramkissoon says.

“The property management company is very beneficial, I wish I had known about that in the past,” he says. “It’s a good safety net.”

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