For many fitness business owners, the initial stages of owning a gym are about navigating the balance between expenses and revenue. And oftentimes, this can limit options for finding gym space.
In many markets, purchasing a building for a micro-gym simply isn’t feasible, unless you have a cool million or more at your disposal. On the other hand, there are markets where it’s not only achievable, but actually advantageous.
That was the case for Sarah Elizabeth Heimer, the owner of CrossFit Unforgiven in Ada, OK. For the first four years of owning a gym, she was leasing the facility. But when she was given the opportunity to purchase the building, she took it. Heimer is still in that building today, having paid off the entire mortgage within three years.
“Eliminating that overheard was the best decision,” she said.
Opening a Gym: The Beginning.
Heimer, a former professional Mixed Martial Arts (MMA) fighter, started her gym in 2010. It began as a MMA gym in a small facility that she rented. As her business grew, she needed more space. She was able to take on an additional, small portion of her current building. But unfortunately, her landlord increased the rent exponentially.
“They almost took advantage of the fact that we needed more space,” Heimer said. “So even though we added just a quarter more (space) than what we had, they more than doubled the rent. So it just kind of priced us out.”
As a result, she started looking for a new space. When she found a 4,500-square-foot facility (3,000 more than she was currently occupying), she signed a new lease.
It was about four years into owning a gym that Heimer was given the option to buy the entire building. At the time, it sounded daunting. But when she crunched the numbers, she realized it wasn’t as unachievable as she initially thought. Her mortgage would be approximately the same as her current rent. So she took the leap and purchased the building.
When Owning a Gym Paid Off.
“With the additional space, we blew up really fast,” Heimer recalled. “We started the transition into strength and conditioning and started focusing more on the CrossFit aspect of training.”
In 2017, her gym became a CrossFit affiliate.
The growth of her community gave her additional gym revenue, allowing her to pay off her mortgage more quickly. She eventually paid it off and has now been mortgage-free for five years. Without the facility costs, Heimer says it’s “so much easier to migrate through the dips and peaks of owning a gym.”
She added, “A gym business just naturally slows down and picks up at different times of the year, and it gives you more wiggle room to invest in your facility. You don’t have to be quite as worried (during the slow times).”
There’s an additional benefit Heimer enjoys as well. Now, when she makes facility upgrades, like painting the walls, she’s improving a space she actually owns. When she was renting, any upgrades would be putting value into a property that someone else owned.
“I know a lot of gym owners, even though they rent, are responsible for any upgrades or making it more stylish,” Heimer said. “And all of a sudden (when you own), you’re not putting that value into somebody else’s property, you’re putting it into your own. And now you have borrowing power and equity.”
Other Advocates for Owning Gym Real Estate.
There are other proponents in the industry for owning a gym building. Stu Brauer, owner of WTF Gym Talk encourages gym owners to get into real estate, if it’s possible in their market.
Brauer explained that owning the building gives you an asset that will appreciate in value, even if the business itself isn’t flourishing. This means you have options when it comes time to sell. At that point, you could sell your assets and keep the property, or sell them both together.
Brauer has worked with a plethora of gym owners as they go through the process of selling a gym. In his experience, many don’t sell for much more than the value of the depreciated equipment. For that reason, gym real estate changes the transaction and the sale opportunities.
Want proof? Check out this recent success story about how investing in gym real estate paid off in big ways for Dave Henry and CrossFit London!
In Summary: If Possible, Buy the Building.
Over the course of owning a gym, if you’re in a position to purchase a building, Heimer recommends you do it.
“I know the thought of having a loan and a mortgage can be pretty overwhelming,” she said. “But most often times, your mortgage isn’t going to be far from what you were paying in rent. And when you pay rent, you never get to see the benefit of that money. Other than the benefit to be in the location (you’re in).”
She added, “Owning the facility is an investment in your business. It increases the value of your business. And regardless of whether you decide to be done with owning a gym some day, or if your gym business doesn’t work out, you’ve got that property that has value that can be sold.”
Pro Tip: Once you’ve found your perfect gym location, it’s time to work on running a successful fitness business! Book a demo with our team today to find out how PushPress can help to save you time and level up your business.
