The Benefits of Passive Income
Shop: A Class Paint and Body Repair
Owner: Narish, Rosanna and Greg Ramkissoon
Location: Kissimmee, Fla.
Staff Size: 5
Shop Size: 4,300 square feet
Average Monthly Car Count: 15-25
Number of DRPs: 1
Annual Revenue: $225,000
The idea of passive income doesn’t come up often in the pages of FenderBender–after all, collision repair is a profession of action, taking something damaged and repairing it.
However, the business of collision repair goes far beyond bumpers and panels. Body shop owners and operators have goals of profitability and sustainability just like any other entrepreneur. Some bedrock, nearly guaranteed passive income can come in handy in just about any situation.
That’s at least some of the thinking, says Greg Ramkissoon, vice president of A Class Paint and Body Repair, behind his family business’s move into property management.
A Class, located in Kissimmee, Fla., about half an hour south of Orlando, recently moved into a 7,700-square-foot building the shop had custom built. The body shop occupies just more than half of the building, renting out the rest to two other businesses. There’s that passive income.
“We know the struggle, and not every month you make money,” says Ramkissoon. “Having property management [in the mix], it’s a consistent amount of money per month. And if you do it in the right way, it’ll pay all the bills and whatever you profit from the body shop it'll be straight profit.”
Building with a plan
Ramkissoon co-owns A Class with his mother and father, Rosanna and Narish Ramkissoon. He says his father is originally from Trinidad and Tobago, where he learned to be a bodyman, doing framework, panel replacements, and heavy welding.
Narish landed in Kissimmee via Boston working in various body shops along the way, before opening A Class in 1996. Ramkissoon says his father continues to paint while his mother handles the accounting. The shop staff is rounded out by Ramkissoon, who will sometimes step in to help with painting when he’s not running the office, alongside a bodyman, and a prepper.
A Class started in a 1,000-square-foot space before landing in a new location with 5,000 square feet at its disposal. In both instances, Ramkissoon says, the business rented, and after two decades of doing so, its owners began looking to have more control over their facility.
Knowing that impact fees–the one-time cost of the city or county to connect a new building to electricity and sewer–could be a significant impediment to building their own facility (see box below), Ramkissoon says he and his family initially sought out an existing space to buy.
However, when those efforts came up empty, he says the focus shifted to building a custom facility, all the while with the plan to build it larger than needed for the body shop business, to section it off, and rent out that extra space.
Impact Fees are Impactful
Greg Ramkissoon co-owns A Class Paint and Body Repair, which operates out of a building he and his family had built for the business. The shop only occupies about half the building, while the rest is rented to two other businesses.
Having been through the construction of a custom body shop space, Ramkissoon’s advice for prospective builders is to be aware of impact fees.
“They were a shocker,” he says, explaining that impact fees are the one-time costs for local governments to provide public services to a newly developed property.
Ramkisoon says that in Florida, where his family’s shop is located, the fees can be $20,000 and up.
They’re a an important factor, he says–so important that A Class initially sought to find an existing facility, as opposed to building, in order to avoid impact fees.
Enough to pay for everything
A Class moved into its purpose-built facility three years ago, Ramkissoon says, with the building process itself taking two years of its own. Those two years of construction, he says, provided their own lesson in how not to be a landlord (see box below).
Located about 10 minutes from its previous location in a low-crime area, the new building comes in at 7,700 square feet, with A Class occupying 4,300 square feet of it.
Ramkisoon says the remaining 3,400 square feet are rented to two businesses, an importer of right-hand drive Japanese vehicles, and a polishing and powder coating company.
Ramkissoon says the tenants were referred via friends, and by renting the extra space at a going rate of $2 per square foot, his family’s plan of getting into property management is going well.
“At that rate that’s enough to pay for everything,” he says.
How Not to be a Landlord
A Class Paint and Body Repair built its current facility with extra space that it rents to other businesses.
Co-owner Greg Ramkissoon says the build was a two-year process, and while it happened the shop continued to rent shop space. He says those 24 months became a solid lesson in how not to be a landlord.
Ramkissoon says his shop's former landlord caught wind of its plans to move on, and put the screws to the business, first terminating A Class’s existing lease and putting it on a month-to-month lease.
Near the end of that two-year period, he says, the former landlord then began increasing the shop's rent, culminating in a quadrupling of rent in the final month the shop leased space from the company.
“When you’re building a property and you’re renting at the same time, it’s tough,” Ramkissoon says. “We had to use all our profit just to keep the doors open.”
Some three years after moving the shop into its own space and beginning to manage his own property with two renters, Ramkissoon says he’s not following the lead of his previous landlord. For one, he says, he’s a lot more lenient.
“We don’t want to follow their ethics,” he says.
A good safety net
So far, Ramkissoon says, the biggest surprises of being in property management has been the small things renters often don’t have to worry about–keeping things like fire extinguishers up to date and maintaining the outward appearance of the building.
“Now I understand, that’s me,” he says. “I’m the guy outside picking up all the trash.”
Alongside no major issues from its renters, Ramkissoon says A Class is also still firmly in the honeymoon period with its new facility.
“Everything is brand new so nothing’s broken yet–in like, 10 years, that’s when the AC unit is breaking,” he says.
Likely before A Class needs to replace its air conditioner, Ramkisssoon says the shop is headed toward growth.
He says A Class recently became an Auto Repair Xpress shop with GEICO, and that could mean hiring more help for the shop floor, while not exceeding its current footprint.
There’s also the possibility of another build and expanding the property management aspect of the business, Ramkissoon says.
“The property management company is very beneficial, I wish I would have known about this in the past,” he says. “It’s a good safety net.”