Making the Bank Happy

Archived from groups: rec.audio.pro (More info?)

"Dan Popp" <ColorsAudio@neo.rr.com> wrote in message
news:41D0C670.E9998C74@neo.rr.com...
> Hi again, RAP'ers.
> I'm in a new situation that a few of you may be able to help me with.
> I'm getting out of my basement studio and creating a commercial
> recording space, properly designed and everything (!).
>
> If you've done this, you know that the bank is very happy to loan money
> for the building (the building is their collateral) and they are very
> happy to loan money for equipment (likewise), but the bank does not know
> what to think about all this exceptional build-out required to provide
> acoustic isolation and proper room geometry etc. etc. - the very stuff
> we need to make it a "studio."
>
> They are going to research comparable buildings that have been sold, and
> try to ascertain how much value (if any)of this "single use"
> construction is retained. So my question to those of you who've gone
> before me is: is there a place to point the bean-counters for sales of
> audio studios that have had some serious acoustical improvements... or
> is there a better way to convince them that this is a good thing for
> them?
>
> I would very much appreciate advice from those who have "been there."

Well, I haven't "been there" in terms of getting a bank loan for this
particular kinda stuff, but IME, banks prefer the lowest level of risk
possible... in that reagrd, I would try to find references for recently-sold
pro-level studios in the highest real-estate districts in the country - i.e.
NY, L.A., SF, etc. If you do this, there can surely be be enough "padding"
in the price of the property to cushion any expense you may have in terms of
acoustic buildout. IOW, if your bank is even somewhat on your side, they can
find enough of a difference between the blue sky & the real deal to justify
your expense.

Neil Henderson

Archived from groups: rec.audio.pro (More info?)

> If you've done this, you know that the bank is very happy to loan
money
> for the building (the building is their collateral)

My response is based on experience in and outside of the studio
business, but I would stop you here. A very savvy banker once told me
"banks are not in the real estate business", ie they don't want default
and as such are not really happy loaning on collateral alone.

> happy to loan money for equipment (likewise),

Banks don't want to loan on equipment collateral for studios. They
know that the minute you receive the item, the value is halved (or
less).

> what to think about all this exceptional build-out required to
provide
> acoustic isolation and proper room geometry etc. etc. - the very
stuff
> we need to make it a "studio."

IMHO exceptional build out is the kiss of death. There is no way in
the world that cost can be passed along. In any given area it is
highly unlikely that another startup will be looking for your perfect
acoustics once your venture fails.

Build outs in commercial space never suit the next tenant . Thats why
you always see the signs on commercial property that say "build to
suit:=)

Chuck

Archived from groups: rec.audio.pro (More info?)

Thanks, guys.

"Serious" in my case means purpose-built, though not with exotic materials.
Yes the acoustical shell could be torn down; the issue is that the cash the
bank is putting into it is less than the cash they could get out of it in a
sale. For the building loan they assume that the value of the property will
go up, so there is a lot of money available for long term use at a
relatively low interest rate... for "equipment," as you know, the term of
the loan is very short and the rate is higher.

The bank wants to look at this kind of buildout as "equipment," or almost as
a "supply" that instantly loses its value. If the next buyer were a studio,
of course, the picture looks quite different.

Roger made the point that _somebody_ finances this weird stuff. I guess
it's just a matter of finding the right lender.

Yours,
Dan Popp
Colors Audio
USA

Dan Popp wrote:

> Hi again, RAP'ers.
> I'm in a new situation that a few of you may be able to help me with.
> I'm getting out of my basement studio and creating a commercial
> recording space, properly designed and everything (!).
>
> If you've done this, you know that the bank is very happy to loan money
> for the building (the building is their collateral) and they are very
> happy to loan money for equipment (likewise), but the bank does not know
> what to think about all this exceptional build-out required to provide
> acoustic isolation and proper room geometry etc. etc. - the very stuff
> we need to make it a "studio."
>
> They are going to research comparable buildings that have been sold, and
> try to ascertain how much value (if any)of this "single use"
> construction is retained. So my question to those of you who've gone
> before me is: is there a place to point the bean-counters for sales of
> audio studios that have had some serious acoustical improvements... or
> is there a better way to convince them that this is a good thing for
> them?
>
> I would very much appreciate advice from those who have "been there."
>
> Thanks.
> Dan Popp
> Colors Audio
> USA

Archived from groups: rec.audio.pro (More info?)

Scott,
Thanks. I will keep your offer in mind. My wife and I were hoping not to
have to put our home equity up as collateral, but that may be the way the
gap is finally bridged. Oh for an old, sick, rich relative.... 8-)

Dan

Archived from groups: rec.audio.pro (More info?)

It's scary, Dan, and I don't envy you one moment of your hair pulling,
although I almost went down this path with a local '30s movie theater (my
house was built in the '30s, too, so it's all neighborhood based). You know
the kind of place. 600 seats, large space, old plaster cornices, etc., and
the idea was to offer the DC area a small film post production place to do
local work rather than going out of town. Turns out there's one company
over in the VA side of DC, and although I don't mind being competition, a
$500k minimum buildout wasn't my idea of having a small commercial studio
(glad Glenn Meadows talked me out of it).

Ultimately it turned "as is" into a hispanic church with bands on the stage
(remember these old places always had stages before the screen) and now they
have at least $200k invested in just BUSSES to get people to the church.

Probably I should have considered opening a church! <g>

I wish you luck. It's a brave move to make, but I'd agree with you on not
using your home as collateral if you can.

--


Roger W. Norman
SirMusic Studio

"Dan Popp" <ColorsAudio@neo.rr.com> wrote in message
news:41D34F4E.3539B7AC@neo.rr.com...
> Scott,
> Thanks. I will keep your offer in mind. My wife and I were hoping not to
> have to put our home equity up as collateral, but that may be the way the
> gap is finally bridged. Oh for an old, sick, rich relative.... 8-)
>
> Dan
>
>
>

Archived from groups: rec.audio.pro (More info?)

The theater is right down Flower Ave about one mile. Doesn't really matter.
Load in would have been hell, place is somewhat less than nominal for a
recording studio in terms of the types of people hanging around, but then
again this was about 8 years ago when they were trying to remarket the area.
Lots of drunks sleeping it off and cops don't even seem to roust them
anymore.

But location aside, I still think it would be a viable situation to have
some minimal post abilities here. Then again, if it was, perhaps it would
already be here.

The other place I was talking about is over in 7 Corners just off Sleepy
Hollow. Down the road from Mike's house.

--


Roger W. Norman
SirMusic Studio

"Scott Dorsey" <kludge@panix.com> wrote in message
news:cr2955$btk$1@panix2.panix.com...
> Roger W. Norman <rnorman@starpower.net> wrote:
> >It's scary, Dan, and I don't envy you one moment of your hair pulling,
> >although I almost went down this path with a local '30s movie theater (my
> >house was built in the '30s, too, so it's all neighborhood based). You
know
> >the kind of place. 600 seats, large space, old plaster cornices, etc.,
and
> >the idea was to offer the DC area a small film post production place to
do
> >local work rather than going out of town. Turns out there's one company
> >over in the VA side of DC, and although I don't mind being competition, a
> >$500k minimum buildout wasn't my idea of having a small commercial studio
> >(glad Glenn Meadows talked me out of it).
>
> Where is this theatre? I assume the place over on the VA side is Bono,
> which has a pretty limited dubbing stage. Bono's film facilities are
> being gutted in order to make space for HDTV systems and I was very
shocked
> when I went a kine job over there this fall and got it back with a note
> saying they'd sold all the kine gear on Ebay and weren't doing it any
more.
>
> >Ultimately it turned "as is" into a hispanic church with bands on the
stage
> >(remember these old places always had stages before the screen) and now
they
> >have at least $200k invested in just BUSSES to get people to the church.
> >
> >Probably I should have considered opening a church! <g>
>
> It worked for Elron.
> --scott
>
> --
> "C'est un Nagra. C'est suisse, et tres, tres precis."