Hey All,
I’m thinking about renting the use of my shop to a woodworker for a little additional income. I was wondering what is a reasonable rate? Consider the following: I work in the shop full time. The shop is a pretty nice facility, stocked with pretty nice machinery. There is 2800 sq. ft. of insulated and heated work space, including a 350 sq. ft. paint room. Also there is a 650 sq. ft. attached lumber shed.
I rented shop space once and it was based on an hourly rate. Being a profecional woodworker this was easy to keep track of because I was recording my hours worked on the job anyway. I payed $3.00 an hour. And that didn’t take that much of a cut out of my $35.00 hourly rate. This way of charging of course requires a good degree of trust between the renter and the rentee.
So I am wondering what do you all think? What would you be willing to pay? How would you prefer to pay for shop rent, hourly or monthly? What rates have you heard of?
Thanks,
EWE
Cushing, Maine
Replies
Since you have a professional shop you probably know what your overhead costs are on a per hour basis. I would use this as a starting point and then add any profit you want on top of that. You should also consider the liability aspect of this - will your insurer allow it? In our litigous society, I would be very leary of allowing anyone to use my shop. One accident by someone who either may or may not know what they are doing could put you out of business.
Ewe -
Steve50 raises a good point about the potential liability. You may need to talk to your insurance carrier about this.
I'm assuming that your shop rate includes something for maintaining or replacing your tools and buying consumables. That number will need to go up to account for increased useage.
Since you already use your shop full time, you may need to add something for the "hassle factor". Sooner, or later, you'll find yourselves waiting while the other person uses a machine.
$3/hr is too little to charge.
$3/hr is too much to pay.
I think it is a poor idea for both sides.
If you don't aleady know what your monthly overhead is, then here's the perfect chance to figure it out.
If you own the building, divide its value over 20 years.
Take the cost of all your machines and depreciate them over a 7 year period.
Add your regular expenses like electricity, trash removal, municipal taxes, etc.
As Steve said, you MUST talk to your insurer and have full coverage for the renter. He must pay a share of your existing insurance plus whatever the premium is increased by.
After you get a monthly overhead cost, add whatever % you feel you deserve to make it worthwhile.
And no less important - you must lay down the rules of what is allowed and what is not. For example, does he get access to the shop 24 hours a day, 7 days a week? Does he get to use your phone line? How are you going to keep track of the materials he takes from your stock?
Get a deposit up front for any damages or expenses incurred. And make sure you have a clause to end the contract on short notice if things turn unpleasant.
David Ring
http://www.touchwood.co.il/?id=1&lang=e
Like real estate, it depends a lot on where you are(Maine) and then what the going rate is for warehouse/industrial space in that location. Since you're fully equipped, that's a premium added on. Other variables- is this woodworker a pro or hobbyist?, and as stated, you need to quantify the hassle factor.
If you both sign a liability release waiver, it may or may not prevent lawsuits arising from injury, but it will at least bring the issue of safety to the forefront of the tenant's mind.
Shop space where I'm at in the city is far more than you or he will pay, so it's really not comparable on that basis. But a monthly rate is easier for all to compute than an hourly rate based on usage.
Edited 12/18/2006 11:17 am ET by jackplane
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