- Gym World
- How to get (almost) free space for your gym…
How to get (almost) free space for your gym…
While running a CrossFit business that brings in $300,000/yr…
What’s up Gym World?
Tim Carroll from 908 Athletics is taking a unique approach to expansion.
He’s been in the industry since 2009 and owns two CrossFit gyms, each profiting $150k/yr. In 2019, Tim decided to shake things up with a new training concept called Endure Training Co.
So last year, he bought a 9,200 sq ft building for $1.35M. He used 2,400 sq ft for his concept and leased out the rest. Thanks to his solid network, he quickly filled the space with tenants.
Now these tenants are covering the majority of Tim’s operational costs, bringing his monthly expenses down to $1,000.
Here’s how he did it:
Slow & steady compounding
A common regret we hear from the gym owners we talk to is that they expanded too soon. Not Tim, though.
Whereas many gym owners like to experiment with different ventures like Airbnbs, coffee shops, and recovery studios, Tim says his priority has always been focusing on making his gyms better. That has led to slow and steady increases in profit over the last 15 years.
He was in a great position to buy real estate because he had been stacking up cash flow for a long time, making it easier to get a bank loan. That bankability came in handy because Tim put his property under contract at the start of the regional banking crisis last year—when no one had an appetite for lending to unproven gym concepts.
Picked the right property
Tim originally wanted to buy a building to house one of his gyms. But New Jersey’s real estate market is competitive, and finding the right space was hard.
At the same time, CrossFit’s popularity was declining, so he had started cooking up a new concept.
Fast forward to 2023, a close friend of Tim’s had found a listing for a 9,200 sq ft building, previously a sport-specific training center. It came with:
2 residential units,
A large upstairs area, and
Additional space in the back with a separate entrance.
Tim realized the property presented a unique financial opportunity. He could use a bit of the space for his new concept and rent out the rest to people in his network. So, he went for it and put down an offer.
Followed the real estate playbook
Tim’s approach to buying real estate is similar to what we’ve seen from other gym owners on here:
He worked with a broker.
Secured funding through an SBA 7(a) loan.
Made a 15% down payment.
This led to a mortgage of $8,600/mo. And because of the additional space, that allowed him to bring in 5 tenants, turning his gym into a steady rental income stream:
A physiotherapist pays $2,000/mo.
A baseball group adds $4,250/mo.
The two residential units bring in $950 (with potential to increase) and $1,800/mo, respectively.
A personal trainer rents some space for $700-$1,000/mo.
After accounting for various operating expenses, Tim’s cost for running his gym comes down to just $1,000/mo.
Not bad, considering he only uses 2,400 sq ft of that space for his concept.
Tim has plenty of years of experience in the gym business, and it’s clear in his focused, methodical approach.
When we asked about his future plans, he’s sticking to what he knows best: honing in on his business and working towards making the third location profitable.
With the added advantage of owning gym real estate, he’s now on a faster path to long-term wealth.
until next week,