Our first six or so facilities went like this.

1st year $30,000 loss.
2nd year $10,000 either way.
3rd year $30,000 gain.

At this point in time usually by the third year we had gotten our temporary loans back that we had to lend the facility to get through the first year to 18 months.

4th year on generally a $30,000 to $70,000 net before depreciation. Today these numbers are better.

It used to work out well tax wise. The amount of money we made over the first five years was balanced out by early losses and depreciation on boards, glass, & carpet, which is five years, and then depreciation on the building which was in the 28 year range. Generally our first five years, tax wise, was a wash. Now depreciation has been changed on buildings to around 38 years and depreciation on the boards, glass, and carpet is gone after five years. When year six comes it’s a problem.

The next two or three facilities picked up the pace. We timed our closings better and purchased buildings just prior to the busy season and make a little money during the busy time, and even had enough left over to get us through the slow times.

1st year $10,000 either way.
2nd year $10,000 to $30,000 plus
3rd year $30,000 to $70,000.

This assumes the market doesn’t change much with new competitors and your management doesn’t burn out. If both of those things happen and you keep your payments around $4,000 to $5,000 a month, you might survive.

Our last two facilities have made money in their first year. One made around $20,000 and the other about $40,000. UPDATE 5 May 98: We've had six facilities in a row make money their first year. UPDATE: 20 Jan 00: Three of our next six after having six facilities in a row make money, have sustained memorable losses the first year. UPDATE: Only opened one facility since the last update and lost plenty the first year, a bit the second and probably be positive this year.

If you’re paying $500,000 for a building, your payments are around $5,000.00 a month. If you're paying $800,000, payments are $8,000. You see the pattern. After we get over the learning curve, assuming we survive and we’re deep enough financially, our average facility nets around $30,000 to $70,000. If we pay $700,000 for our building, we have a payment in the $7,000 range. We were making $30,000 to $70,000 per year with a $4,000 per month payment. With a $7,000 per month payment we’re now losing money or making $30,000. That’s not much of an upside for the money invested. If your management burns out and you have new competitors visit at the same time, life is going to get difficult. That’s why in the last discussion, when we talked about locating a building in Las Vegas and couldn’t make the numbers work we passed. Had we paid $700,000 or $800,000 it might have worked if everything had gone perfect. But it wouldn’t have. It never has. UPDATE 5 MAY 98: $700,000 no longer scares me as I have lots of facilities leveraged higher than that. I don't like it but we still make it work. UPDATE 20 Jan 00: I now wish that I had bought that building in Vegas as I have had two or three buildings go over $1,000,000.

We’re like gas stations. Someone opens one and starts doing well. Consequently someone opens one across the street. If they do well, another one opens. Now no one is doing well and we’re all struggling, we have to wait for someone to go under before we start to do well again. That’s when we hope we have the deep pockets to last everyone out or less debt load. Someone will fail and in two or three years someone will start up again, and just like every other business, the process starts over. We have to stay ahead of them in every aspect of the game. The good news so far is that no one financially deep has entered the game. We’re still a collection of 300 plus mom and pop operations.