Acquisitions Anonymous - #1 for business buying, selling and operating - Exotic Car Storage Deal in Miami: Is It Worth $16 Million?

Episode Date: October 18, 2024

In this episode of Acquisitions Anonymous, co-hosts Mills Snell and Heather Endresen take a deep dive into an intriguing real estate development opportunity—an exotic car storage facility near the Homestead-Miami Speedway in Florida. From analyzing the project’s $16 million price tag to debating the pros and cons of buying a partially constructed property, this episode covers the ins and outs of this unique opportunity.Mills and Heather discuss the broader real estate market in Florida, share insights about repurposing properties for high-end storage, and ask the million-dollar question: Why is this development up for sale before it's even completed? Plus, they tackle key concerns about cash flow, market demand, and potential pitfalls.If you’ve ever wondered about the intersection of luxury cars, real estate development, and high-stakes investing, this episode is for you. Stick around until the end for valuable tips on navigating deals like these and a quick shoutout to our sponsor, Acquisition Lab.CTA: Learn more about buying businesses with our partner, Acquisition Lab: www.acquisitionlab.comGet your tickets to HoldCo Conference 2025: www.holdcoconference.comSubscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Well, then it's time for a site visit, Mills. Yeah, yeah. I mean, this would be really cool. I may call some friends in the greater Miami area and ask them if they've heard of this deal just because I bet that this is one that has made the rounds. Well, said Acquisition Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100% here. Welcome back, everybody, to another episode of Acquisitions Anonymous.

I'm Mills Snell, one of your co-host, me and Heather Anderson are on the pod today. And we do something we've, I don't think, ever done before, which is we pull up biz by sell and we pick a deal from a list. And it is a very interesting list. It's very exotic, you can say. We look for businesses for sale in Florida and it has a very interesting selection bias and a very interesting sample set because there are some wild things that we see. Really, really interesting. We didn't chase every kind of rabbit along the way. But we picked this interesting business. It was actually turned out to be a real estate development that somebody wanted you to buy before it had been completed. So it was more kind of real estate than it was operating business. But we talked about the

merits of the underlying business philosophy. It's an exotic car storage development that is right next to the Homestead Miami Speedway, which is a mouthful, but really fascinating. We talk about the dynamics of what does this business actually do? There's Lennel or there's condos. It's a real estate development that you're picking up in the middle of the deal. And so that has its own challenges. I pull up the map. I've never been to the speedway. It looks fantastic. But kind of we're wondering, how is it that we're the lucky ones, right? That's always the question. you the lucky one who's on the receiving in of this deal when obviously some really smart people have probably passed it up there in Florida. So I hope you enjoy the episode. It's very, it's very

entertaining. At least it was entertaining for me, but I hope you enjoy the episode. Stick around for a quick word from our sponsors. This episode of Acquisitions Anonymous is sponsored by Acquisition Lab and their team. They've been longtime supporters of the pod and they provide a really great service for people who are looking to acquire a business. So it's created by Walker Diable, who's become a friend, the author of Buy, Then Build, How to Outsmart the Startup Game. So Acquisition Labs is an accelerator with a highly vetted, cohort-based, educational, and support community for people who are serious about buying a business. So a lot of our listeners like you, you tune in every week to our deal reviews, you want to get in on buying a business.

You know, you're on this podcast because you're trying to learn how to buy a business. But if you're not quite sure where to start, Acquisition Lab is a great place to start. So they exist to help people buy a business and to navigate all. all those complexities of the process, everything you hear us talking about on the show. They provide a proven framework, tools and resources that support you all the way from search to close. They do it. There's a whole bunch of educational material and support.

So if you're serious about buying a business, check out AcquisitionLab.com or you can actually email the program director Chelsea Wood directly. Her email is Chelsea at buy then build.com. Hey, Heather. How's it going? Good. How are you doing after the big storms? storms, right, too.

Yeah, yeah. Well, one just hit Florida and one came through here. But yeah, we're doing, we're doing it. Okay. It's, you know, feast or famine for the roofing business a lot of times. Thankfully, we stay kind of steady. But it definitely picked up a lot of things on the demand side. All right.

Well, I'm glad everything's okay. I guess it's good. You have business, right? Yes. Yeah, it reminds people that the roof didn't fix itself. Yeah. Essential. Yep.

All right. I have a few different deals. And I have a few different deals. And I, I was scanning biz by sell, our aspiring sponsor, we aspire to be their sponsor. And I found kind of an interesting hole or kind of dark corner of biz by sell. And it's just if you search for businesses for sale in the state of Florida, you get some really interesting things, like really interesting. So I'm going to, I'm going to share my screen. And there are a few

different things that really stood out to me. So there, and we can pick one. I'll defer to you, but this one really stood out, this luxury car storage business warehouse asking $16 million and it has some real estate. Another one that stood out was this exquisite fine jewelry in Citrus County, Florida asking $19.9 million. There is barely any information. They don't tell you, their revenue or earnings or anything like that, but it is kind of still interesting. One that we won't do, but was kind of also, I clicked on it just because I wondered, did they say anything about the financials? But there's a strip club with real estate for sale in Miami.

I just personally would never own a strip club for a number of reasons, but I have talked to people who own them and they are fantastic businesses. So this is what you can find if you search biz by sale and fly. Florida. Wow. It's wild in Florida for sure. I thought it was California, but no, it's Florida. Florida is wilder than us. Look at this one. There's a mature, they're asking $900 million in Sarasota, Sarasota County, Florida. It's a well-known gynaecology and eurigen practice in a quaint beach town. $900 million. Like who lies that other than a hospital system? Right. The whole system. Yeah. Right. Yeah. That's somebody hit too many zeros, I hope. Yeah. All right. So which one do you think? Find jewelry. I feel like the jewelry is just going to come down to the inventory as far as that's what they're trying to get you to buy it for. They call it out, Heather. You're so smart. You didn't even look at the link. I already know that one. 15 million. You know it? You know it? No, I don't know it. No. I don't know it. No. I just. I can feel it in my gut. They didn't give you any information on earnings or the financials. It's really. just the inventory they're trying to sell. And I've looked at another small retail jewelry store where someone was trying to sell it to their employee. And at the end of the day, that's kind of

what it boiled down to. That really the cash flow was not good in that situation. It was mostly inventory. You nailed it. You nailed it on that one. I clicked on it and that's exactly what it was. All right, let me find. So the car, the car storage sounds interesting. Yeah. So look at this. This is this is kind of interesting. So, all right, I'll read it. It's luxury car storage business warehouse in Homestead, Florida, which they say is in Miami-Dade County. The asking price is $16,000, $125,000. They don't list the revenue. They don't list any FF&E. They say the price per square foot is $375.75. They don't list any net operating income. They say it was built in 2024, which there's a rendering drawing here that makes me wonder, is this actually built yet?

or is this kind of a, you know, some kind of greenfield type development, but they say it's 43,000 square feet. This is a description. Speedway Auto Vault is a luxury four-acre gated car warehouse development located next to the homestead Miami Speedway. Construction underway. There we go. This listing is to buy out development and operate a very popular business of exotic car storage rentals and or resale of completed warehouse. condos. Air condition, 22-foot concrete pre-cast twin T-ceiling slash roof. Don't really know exactly what that means, and I do construction. 10 by 10, electric roll-up hurricane garage doors, 7-inch thick concrete slab, which can accommodate triple car lifts, optional epoxy flooring within metal mezzanine man caves or storage available. Features include security cameras, 20-foot ceilings, back,

bathrooms with showers, hurricane garage doors, air-conditioned fire sprinklers, 43,000 square feet of warehouse with various size individual spaces and assigned NDA is required. Properties listed by this guy, Robert Zinzel from Coral International Realty. He is a real estate agent and a broker, which can be a good or a bad sign. And we've talked about that some before. Okay, Heather, what do you think about this? So this is like, it's like, yeah, it's a real estate play. it almost makes me feel like it's like self-storage for luxury cars.

You know, it's like in development. So you don't really have, you have to go, you know, you have to go get your customers. You have to build up the cash flow and stabilize it. And so I think what they're asking is more of like a real estate value. What bothers me, though, is it is already under construction. And whoever's building it doesn't want to see it through. They want to sell it now. And that's a little concerning.

I do think this is always an interesting business, though. What I've seen in California has been repurposing of other types of properties of buildings for RV storage and boat storage. I've seen that a lot because people want to store, especially if it's in the inland areas in California, they want to store those things in a somewhat climate-controlled and not right out in the sun kind of situation so they last longer. and I've seen real estate brokers buy buildings that were cheap for one reason or another and repurpose them for this use. I like that idea. And I like, you know, like there's all these mall properties. We've got a lot of retail properties that don't need, aren't needed for their original purpose intended anymore.

To me, this kind of business feels like it would be wiser or better where you go in and take something and repurpose it rather than a brand new development that's designed just for this. What do you think? Yeah. So I think the only counterpoint to that is if it is tailored specifically to these high-end exotic cars, the ultimate play here seems like they have tied up a piece of property right next to the Speedway. And you could probably do some kind of market, you know, testing to see whether or not people actually at the Speedway want something like this.

So they want a place that they can store their cars, you know, effectively across the street or next door, which I would think. probably sounds pretty good, right? You don't have to trailer it back and forth. You don't have to take it to your home garage. It seems like if this were a Class B or Class C warehouse that was being renovated and repurposed, it might not appeal to the high-end demographic of these exotic car folks. You know, if it's just a dingy building that got painted and there is maybe some cause for concern or maybe it feels like it cheapens the kind of offering. The thing, the thing, the thing. The thing, the thing, thing I'm thinking, though, is, I mean, this is a very, very expensive building, $375 a foot for commercial

or a really industrial new construction is a lot. I mean, by comparison, we were just involved in a project here that was a, in South Carolina, it's not Miami. I don't know the value of the dirt in this equation. It could be a lot. But it was a, you know, 200,000 plus square foot building that was being built all in for a hundred bucks a foot and it's a bigger you know bigger footprint so you know there are some bells and whistles yeah it feels like it's overbuilt yes yes now is it that it is actually overbuilt or is it just that this person is trying to cash out like their actual cost basis for the project and the all in cost is going to be $200 a foot and they just are saying hey somebody come along and make my day and I'll cash out

and ride off into the sunset. I can't imagine that actually being the case or coming to fruition, but it does make me a little bit kind of skeptical and, you know, interested in what's the premise here. Yeah. I wonder, I mean, how much do you think somebody pays per month to store a car like this? I don't know. I certainly have heard in living near L.A. of people doing, you know,

buying all these exotic cars and having. special storage areas. I've never really heard of one being next to a speedway. So to your point, that that may be what sort of is the premium here. But I don't know. What I'm curious, okay, 43,000 square feet sounds like they can stack them three high. How many cars do you think can go in there? And then maybe I can back into how much revenue. Because you need a lot of revenue to pay for $16 million and you still have to stabilize the income. Yeah. Yeah, because you're starting out. I mean, you've got to price a lot of vacancy in this thing. It almost sounds like, too, that they're saying, you know, hey, we're building a blank shell and it's going to have the bells and whistles, but there's kind of a menu of services.

Do you want epoxy on the floor? Do you want a mezzanine put in? Do you, you know, the concrete is thick enough to have a three car lift. But my guess is that there's kind of some, you know, tenant responsibility on the outfit of these. If you want to build a man cave, you know, maybe maybe that's totally up to you. I can get the premise. I mean, the thesis sounds awesome. If you have multiple, multiple $100,000 cars and this is what you do and this is where you do it, I would think that, yeah, it's a no brainer to, you know, spend a couple thousand bucks, you know, a month storing the cars in a place that is, you know, dedicated. It doesn't require you to trailer them or drive them back and forth between the Speedway and your house or something like that. I just, I know that there is major, my biggest issue with this is there's major information asymmetry. The person who is selling this probably has already done all the research and why is it that they're not wanting to bring this to fruition, kind of like you said really on. That's my biggest concern. Hey, Michael here, I want to let you know that I'm hosting a conference, first time I've ever done

it. And it's called Holdco Conference 2025. If you want to learn how to manage multiple businesses at once, how to incubate new companies, or how other whole co-owners and operators run their fleet of companies, then should come to Utah next spring. We've got a ton of great speakers, including Walker Dybel, who wrote buy-then build and founded acquisition lab. Plus, we're hosting it at an all-inclusive mountain resort so you can hit the slopes at the end of the day. So please go to holdcoconference.com for your tickets and get 10% off with your discount A-A-Pod. That's holdcoconference.com and use code AAPod for 10% off. Now, back to the show. A feasibility study or something to know what are people paying now in other locations per

car. Yeah, what does the demand really look like here? And you still have to go out and and book the business. You have to take these cars from somewhere. I don't think they're all going to be brand new cars that were just purchased coming and getting stored here. This is, you know, you're going to have to tear them away from wherever else they're storing their cars now. So that's marketing. That's sales and marketing, really. You've got to get their attention and you've got to sell them on the idea of probably paying more to come over to this location for the, for the proximity to the speedway, but also maybe the other bells and whistles that you might put in. It feels really speculative. It feels like it would be kind of

scary. It also, there's a clue here too. They say rentals and or resale of completed warehouse condos. So this is going to have a condominium scheme of ownership where there is an HOA, there's shared services, there's governance, and there's fractional owners. you know, across the entity. I'm sure that that makes it. I mean, we have, we have things very, very similar to this right next to Williams Bryce Stadium, not for car storage, right? But they're these really, really nice buildings that are just used for tailgaining.

And they are only used like seven days out of the year. And people pay a lot of money for them because you can literally, you know, drive up, park, walk, you know, a couple hundred feet. get into the game and you basically have this kind of front row tailgate experience. So, you know, I mean, I get the premise of it. The condo thing probably scares me a little bit more because now, not only are you having to kind of underwrite the revenue potential of this if you're forced to rent them long term and not sell them, but you're also having to underwrite, will somebody like 43,000, let's just say there's 43 units, right? It's a thousand square feet apiece.

at, you know, at 43 units, 16,000, 125,000 divided by 43 units, you're having to sell these things for probably around $400,000. And that's just to recoup your cost from buying it from this person. So, you know, is somebody going to buy a thousand square foot garage for $400,000? I mean, especially if they're an exotic car person. They probably just want to go buy another car. Yeah, yeah. I'm just dying.

This is one of those listings where the story and the almost the tape that the seller plays in their head is like worth the signing of the NDA. And just hearing this person, because I promise you, they are so gung-ho about this thing. You could not tell them. You could not dissuade them. Like it's the best deal ever. And they've probably spent an inordinate amount of time putting this deal together. and they're very bullish. We don't, you know, we don't know why they're getting out of it.

They don't say anything, you know, about why they're getting out. But I would just be willing. I've had enough conversations with people like this where you, like, step into the twilight zone. And this is all this person has been thinking about for like half a decade. Well, and as a lender, I have to wonder if the reason that they're selling is running out of funding. That does happen. And people especially like what you're describing who are super zealous about the project and just believe it can't go wrong, sometimes they'll jump the gun and start building before they have the loan in place. And lenders hate that, by the way, because it messes up the title.

A lot of lenders won't even step in. And I've seen more than one project that went bad that way because they started spending money before they had the loans. and then they made it harder and impossible, ultimately, to get the loans. So that's another thing. If you're taking over a project like this from somebody else, and it's not finished, but it has started, there's a whole title mess that you have to deal with because there could be mechanics liens that the last guy left behind that you don't know about. Yeah, yeah, absolutely.

And, I mean, not to mention, usually when these things trade, they trade for a discount, right? There is distress involved. You're not paying a premium to pick up somebody's kind of half-eaten sandwich, so to speak. So the one kind of avenue about this that is intriguing to me is that there's a pretty big market, especially in these really kind of popular high flying type destinations of the luxury car rental. You know, it could be a day or, you know, a weekend. where people come in and they rent a really nice car. And I've seen some people who do this.

It's the scariest business in the world to me because it just doesn't feel like there would be enough collateral or enough insurance, you know, to like mitigate the risk of somebody taking a $400,000 car that goes zero to 60 in like three seconds. Right. Like I just, but there are people, I think, who make those businesses work. but I just, maybe they're just so good that they keep it under, you know, tight wraps or something. Yeah, it's super risky. And people want to obviously drive fast with these crazy cars.

I don't know what this project is. Now, the more I think about it, is this more appealing to a real, like a real estate developer that's going to sell the units? And oh, if you can't sell them, then you'll run it like a self-storage with some amenities, like as your plan B? or is that plan? Which is the plan B and which is the plan A here? I'm confused. They haven't really made it very clear. And just the fact that they're two very distinctly different ways of going and they're laying them both out here does feel like a distress situation even more. Like, well, you could do this or you could do that. You know. I have a little bit more info. I was, I was envisioning, you know, a kind of a half decent speedway, you know, in a densely populated area.

at this, Heather. This Speedway looks like a NASCAR Speedway. I mean, this is, this is a big deal. But look around this thing. There is a ton of land that could be. So it's not like, like if the Miami Speedway was in this area, you know, and somehow somebody locks down four acres in, you know, this densely populated area. Okay, now we're talking about something else. But maybe this is a swamp or something like that. Yeah, I was going to say Everglades, but I truly don't know what I'm talking about. But I just think there's enough agricultural land and parking lots and things like that around this that there is an Amazon, you know, delivery station and hub. I just think that this is this is one of those like, you know, if you get pitched an oil field deal in Texas, there's multiple really shrewd oil field. investors who have already passed on the deal multiple times, like in order for it to make it to you. I'm thinking anybody who's capable of doing this deal in and around the Miami area has already

been pitched the deal or they've heard about it from 10 people and they're like, there's no way I would touch that thing with a 10 football. But maybe I'm wrong. Yeah. Yeah. And if it was really in such demand, first of all, like you said, looks like the land around here would be cheap because you're out kind of in the sticks there. And second, why wouldn't the Speedway themselves offer, you know, build out a little building and start offering that if it was really going to be super lucrative and their customers really wanted it. When they didn't do it themselves with abundant land around them and somebody's coming along just trying to do it independently and just be near the speedway, it does feel a little shakier

as well. So interesting tip that Google just helped me solve. So the city of Homestead owns the track and it's operated. by NASCAR. So there's kind of a quasi public-private partnership going on. Yeah. But man, this is just so interesting.

I think a site visit is absolutely warranted. I really want to, I really want to see, I feel like I'm really telling on myself, but as a Southerner, I've never been to a NASCAR event and I feel like the odd person out, you know? I'm so glad I've never been to. to a NASCAR fans. I have heard.

I have heard that they are phenomenal. Like you cannot even like NASCAR, but they are just an experience in and of themselves. And I'm sure we'll have listeners who can bag me up on this. Okay. Well, I'm sure it's fun. What I'm afraid of is the noise. Yes. It is, it is, you know, it is very, very loud.

But I've heard is really fun. And it's like, I think amazing for people watching is also part of the appeal. Yeah. Well, then it's time for a site visit, Mills. Yeah. Yeah. I mean, this would be really cool. I may call, I may call some friends in the greater Miami area and ask them if they have heard, if they've, if they've heard of this deal just because I bet that this is one that has made the rounds. You know, if you're in commercial or industrial real estate in Miami, I bet that you've caught wind of this. Tell us what you find out, Mills. Yeah, I think there, we've talked about it on other episodes, but the kind of closing thought on this is, is the dynamic of a real estate agent bringing a listing, right, that is more kind of business-related.

This is really real estate. This is not an operating business. There's no revenue. But it always is just such an interesting tell. Have you brought deals to close where the, you know, the seller's agent, the seller's broker is more of a real estate broker than a business broker? Oh, yeah. Absolutely. we've seen brokers that were absolutely realtors

and really couldn't answer questions around the financials or the business model or everything was kind of over their head. It kind of works out okay in those cases if the broker just kind of realizes it and lets the buyer have direct access to the seller, which every buyer would rather have that anyway. So sometimes it works to the buyer's advantage,

But if they stay in the middle, it can be really frustrating because they really don't understand what's going on. I mean, we have problems with deals that are represented by a broker who's more of a realtor. And also when a seller brings in an attorney that doesn't really do M&A deals. That can be pretty frightening because that's usually a little bit smarter person who's a little bit better at bluffing. They can try to convince everybody they really do know what they're doing. But it's apparent that they don't. And they mess up the deals pretty bad. Yeah.

We could talk about that for hours. The best M&A attorneys that I talked to all like just emphatically say we would love to have great counsel on the other side. We would love for opposing counsel to be really great M&A attorneys because then we can cut through the mess, you know, and just get straight to kind of the meat of the issue instead of all this just kind of unproductive. Yeah, I've had multiple. real estate folks tell me that they're thinking about over the past 15 years, tell me that they're thinking about getting into business brokerage because there's no, there's no barriers to entry. You know, there's no credentialing. Now, securities law plays a role in that, but depending on how you charge fees, most of these folks get around that because there was an SEC, no action letter that basically

kind of, you know, didn't say it's okay, but gave people some kind of wide berth. So I've definitely had folks say, hey, I mean, I'm thinking about, you know, if I'm getting the commission on a piece of dirt or a business, usually the business is going to sell for more. I might as well get a commission on that too. And it's like, oh, man, that's like asking your dentist, you know, to do, you know, orthopedic surgery on your foot. It's just a totally different thing. So. Yeah. I mean, my theory is that we have, we have so many listings that are never going to sell and have a totally unrealistic price expectations on the seller side because we have too many brokers who just want a listing. They won't say no or push back because if they do, they won't have a listing.

So the more we get, the more kind of junk listings we're going to see if that's the case. Yeah. And I can see realtors maybe thinking this would be a good place to go given the new rules after the NAR lawsuit and the real estate side. So good point. We'll have to watch for that and see what happens. what develops over the next few months. Well, Heather, this was a fun one.

I'm glad we got to talk about Miami exotic cars and industrial real estate development. Never would have thought that my day, at the beginning of day, I never thought of would have ended my day on the snow. Really? It was interesting, though. Definitely. Good talking to you. Well, thanks for everybody for sticking around.

I hope you enjoyed the episode. Please like the podcast, send it to a friend. Check out our website, AQUanon.com. you can search by, you know, business type, by category. We have everything tagged there. So if there's things you're looking for, it might help you in your search. But thanks, and we'll see you next time.