Asset Financing - From Factory to Self Storage - Case Sudy

A client approached us to assist with the financing of a factory that they had recently acquired. This factory was in a location where $30K per annum would be the best rental they could expect - the factory itself was approx 35 years old and in reasonable condition with only a little maintenance expected on settlement. And the client was looking at funding the $20K negative loss out of other disposable income.

When we saw the dimensions of the building we ran some numbers looking at the building for an alternative usage ….and went back to the client to see if they were interested in making some changes to the factory that would see it gross between $170,000 and $190,000.

As you would imagine this received their immediate attention and we invited the client to visit our office for a coffee so that we could run this past them ….we ran numbers converting the factory in a Self Storage outlet.

This gave them 2 assets for not much more that the cost of one - they purchase the real estate and they develop a highly profitable cash flow business that could be easily sold off or franchised. We showed them how to finance the fit out and introduced them to a company that specialize in Self Storage fit outs. And yes, the client has decided to turn the factory into a self storage outlet. They thought it was the best cup of coffee they'd ever had.

Can we do this with every factory that a client purchases ….the answer is obviously No! Can every Accountant see other opportunities within a purchase of a factory like this ….probably not. But we were able to in this case and show the client how to set up the fit out, finance the purchase and the fit out and structure some highly profitable product retailing into their self storage business.