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Old 25th October 2019
  #48
Lives for gear
 

Quote:
Originally Posted by bitman View Post
Looks like the real deal. And in Denver too. wow.
Thanks!

Quote:
Originally Posted by bitman View Post
Do you expect ROI in 2019 and beyond?

Well, no, not strictly speaking at least- this is expensive! We've been saving for a long time to do this, and will have some construction debt. That said the business is currently profitable (the salon too), there will not be any equipment that needs to be financed to be operable (in fact I have stuff I can sell), and there won't be any need for major expenses to at least continue current operations.

That said, in terms of taxes and in a general practical sense, the expenses of this construction are depreciated over a 15yr lease term. My wife and I have an LLC that owns the building, and are/will-be leasing it back to ourselves at market rates. Both businesses will HAVE to be profitable relative to market rates for as long as they are running, as we both intend to do valuations and offer some form of profit sharing or limited partnerships to the people who work with us. In any case, the studio business will show a profit over expenses in '19 as it has for 15+ years now.

In a broad sense, this is possible primarily because of not expecting to make a living recording bands. We do all kinds of stuff- play, produce, write, record, mix master, teach, VO, boutique rehearsal space etc. Revenue from production fees, royalties, space rental, playing and intend to extend into live in studio video and so on. I've been doing music full time for 21 years...and haven't had to have any side gigs for 17. This studio will be capable of running 4 sessions at once, or combined into one large session, or many other variations. So fairly different then a typical studio design. It will allow us to keep costs down, stay busy with a lot of people working and keep the lights on. As-is, if I pay myself a reasonable market cost for operations management, the business would show little to no profit. So revenue will have to get up for the business to actually have something left over...

So I guess it depends on how you view that. Both the studio and the salon would be closed and the space repurposed or sold before we would be able to run either at at ongoing loss.