Chicago Residential Lease 2020: Fill & Download for Free

I will use a space that I opened in late 2019 called Basecamp in Lafayette, Colorado (outside of Denver and Boulder). It’s part of the Creative Density Coworking family of spaces. To give you a little context, I started Creative Density’s first 3,500 sf location in 2011 for less than $33,000, the second 3,500 sq ft. the location in 2013 for around $31,000, and then Basecamp’s 7,500 sq. ft. location for around $356,000.Side note: I also bought a coworking space in Chicago recently for $60,000 that was a lot cheaper than building out a coworking space from scratch. I’ll leave those details for the end.Starting a coworking spaces has a few major categories:Build out expenses and lease downpaymentFurniture (it’s a lot more than you expect)Operations TechnologyWorking Capital After OpeningBuild Out and Lease Downpayment:—— Creative Density First and Second Location in 2011 and 2013 ———In the recession in 2011 and 2013, landlords just wanted people in the space. The rental price was lower AND they required only one month of rent as a downpayment. These smaller spaces rented for between $3500 and $4000 a month.Both locations were located in spots that didn’t require any new renovations besides the fixing of some lights and new paint. Build out was $0. I worked with what I had.Total Build Out and Lease Downpayment: Around $4000 for each location, $8000 total—————— Basecamp Coworking in 2019 ———————-This location is in a strip mall and we combined two retail units and a small bar into one single coworking location that is around 7,500 square feet. This required a complete scrap of the old and building something new.The build-out cost to add 27 offices, two conference rooms, and a new kitchen was around $520,000. The landlord covered $320,000 because they are the ones that directly benefit from the build-out. The $320,000 is covered by something called the ‘Tenant Improvement Budget’ that is common in most commercial leases. This isn’t all free money though, you pay for in slightly higher monthly rent.Basecamp needed $200,000 in build-out.The lease downpayment was three months of rent, a total of around $45,000.Build out plus lease for Basecamp: $245,000Furniture—— Creative Density’s First Two Locations———Coworking was new back in 2011 and 13 and the competition was limited. This means that we were able to bootstrap spaces with lower cost furniture from IKEA and Wayfair. The spaces were also smaller and each had around 40 spots for people to work. In total, I spent $15,000 for the first location and $7,000 for the second location.The desks were often from IKEA, but the chairs didn’t match and they were often used from Craigslist. I used this mix of furniture for the next six years until I eventually had to upgrade the chairs and add a few filing cabinets.——-Basecamp in 2019——-I had learned a big lesson on furniture in the last six years - office liquidators. For spaces less than 10,000 sq. ft. an office liquidator can be a very cost-effective way to get name brand, durable, and nice looking furniture. We bought most of our Herman Miller chairs for $150 a piece, conference room tables for $500, and we got tables through a factory direct supplier for around $150.The total cost was around $40,000. This is pretty darn good.Operations and Technology——-Creative Density——Smaller spaces at 3,500 sf don’t have the strains on IT as larger spaces. You can often accomplish everything you need with nice consumer-grade technology. Since both Denver locations were offices in a past life, we just upgraded a few pieces of hardware but kept it mostly the same. We probably spent $1,500 at each location.I did upgrade the locks to be smarter at each location. I started with smart consumer grade locks, but those didn’t last and the limitations were too much. I eventually had to upgrade to commercial-grade residential locks from RemoteLock that cost around $400 apiece.Total Spent: $2,300 at each location.——Basecamp—-Basecamp was a new build out so everything was new and needed to be installed. Plus, at 7500 sf it would have over 200 members. We needed commercial grade quality.We spent around $5,000 on IT equipment from Ubiquity and another $3,000 on door locks that work with our management software, Proximity Space.Total Spent: $8,000Working Capital——Creative Density—-Smaller spaces can reach a break-even point much sooner than larger spaces, however, they are a lot less profitable. If you managing your own space, then you reequire less working capital. In opening a space, I often recommend 3 months of expenses to be in the bank account with access to another 3 months. I managed my own spaces for over 6 years.As Creative Density got more established and predictable, I lowered my own personal cash requirement to 2 months of expenses plus $300 a month for upgrades.Working Capital for two locations: (3 x $5,200)+(3 x $4,800) = $30,000 on hand——Basecamp——Basecamp is larger and has a staff member with around $21,000 a month in expenses. This means we had to budget $63,000 for starting working capital. This is not a fun line item to budget for, but most small businesses fail because they don’t have the right amount of capital to sustain them in hard times.Working Capital Total: $63,000Buying a Coworking Space vs. Starting a Coworking SpaceAt the start of 2020, I purchased a coworking space in Chicago using DenSwap.com For full disclosure, I’m one of the founders of DenSwap. The space was owned by a friend of mine and it sat there for several months without any serious offers, so I made an offer.The space was fully operations with over 100 members and 4500 square feet. It was generating a profit of around $20,000 a year, around $1600 a month.I needed to revamp the space with new build-out of a few offices for $45,000.I needed to buy new furniture for the offices for a total of $7,000Operations: $0 - taken care ofWorking Capital: It was making money, so only two months - total of $24,000.I purchased the place for $60,000 and after my investments, I needed access to a total of $136,000.The space was already making money so the risks were a lot lower than starting a new space. After the improvements, the space will be generating around $7000 more a month in revenue, with over $5,000 of that being profit. I expect my full payback to less than 18 months.SummaryThere are a lot of expenses that people need to consider when starting a coworking space. The main categories are building out and lease down payment, furniture, operations and IT, and working capital. I didn’t include advertising and marketing because there are a lot of ways to do that for free or minimal costs. There are some additional expenses, but that’s most of it.You also have the option of buying a coworking space. There are new services popping up like DenSwap that will allow you to buy all of the furniture and operations with one payment.I hope this is helpful. Comment if you have any other questions.

I will use a space that I opened in late 2019 called Basecamp in Lafayette, Colorado (outside of Denver and Boulder). It’s part of the Creative Density Coworking family of spaces. To give you a little context, I started Creative Density’s first 3,500 sf location in 2011 for less than $33,000, the second 3,500 sq ft. the location in 2013 for around $31,000, and then Basecamp’s 7,500 sq. ft. location for around $356,000.Side note: I also bought a coworking space in Chicago recently for $60,000 that was a lot cheaper than building out a coworking space from scratch. I’ll leave those details for the end.Starting a coworking spaces has a few major categories:Build out expenses and lease downpaymentFurniture (it’s a lot more than you expect)Operations TechnologyWorking Capital After OpeningBuild Out and Lease Downpayment:—— Creative Density First and Second Location in 2011 and 2013 ———In the recession in 2011 and 2013, landlords just wanted people in the space. The rental price was lower AND they required only one month of rent as a downpayment. These smaller spaces rented for between $3500 and $4000 a month.Both locations were located in spots that didn’t require any new renovations besides the fixing of some lights and new paint. Build out was $0. I worked with what I had.Total Build Out and Lease Downpayment: Around $4000 for each location, $8000 total—————— Basecamp Coworking in 2019 ———————-This location is in a strip mall and we combined two retail units and a small bar into one single coworking location that is around 7,500 square feet. This required a complete scrap of the old and building something new.The build-out cost to add 27 offices, two conference rooms, and a new kitchen was around $520,000. The landlord covered $320,000 because they are the ones that directly benefit from the build-out. The $320,000 is covered by something called the ‘Tenant Improvement Budget’ that is common in most commercial leases. This isn’t all free money though, you pay for in slightly higher monthly rent.Basecamp needed $200,000 in build-out.The lease downpayment was three months of rent, a total of around $45,000.Build out plus lease for Basecamp: $245,000Furniture—— Creative Density’s First Two Locations———Coworking was new back in 2011 and 13 and the competition was limited. This means that we were able to bootstrap spaces with lower cost furniture from IKEA and Wayfair. The spaces were also smaller and each had around 40 spots for people to work. In total, I spent $15,000 for the first location and $7,000 for the second location.The desks were often from IKEA, but the chairs didn’t match and they were often used from Craigslist. I used this mix of furniture for the next six years until I eventually had to upgrade the chairs and add a few filing cabinets.——-Basecamp in 2019——-I had learned a big lesson on furniture in the last six years - office liquidators. For spaces less than 10,000 sq. ft. an office liquidator can be a very cost-effective way to get name brand, durable, and nice looking furniture. We bought most of our Herman Miller chairs for $150 a piece, conference room tables for $500, and we got tables through a factory direct supplier for around $150.The total cost was around $40,000. This is pretty darn good.Operations and Technology——-Creative Density——Smaller spaces at 3,500 sf don’t have the strains on IT as larger spaces. You can often accomplish everything you need with nice consumer-grade technology. Since both Denver locations were offices in a past life, we just upgraded a few pieces of hardware but kept it mostly the same. We probably spent $1,500 at each location.I did upgrade the locks to be smarter at each location. I started with smart consumer grade locks, but those didn’t last and the limitations were too much. I eventually had to upgrade to commercial-grade residential locks from RemoteLock that cost around $400 apiece.Total Spent: $2,300 at each location.——Basecamp—-Basecamp was a new build out so everything was new and needed to be installed. Plus, at 7500 sf it would have over 200 members. We needed commercial grade quality.We spent around $5,000 on IT equipment from Ubiquity and another $3,000 on door locks that work with our management software, Proximity Space.Total Spent: $8,000Working Capital——Creative Density—-Smaller spaces can reach a break-even point much sooner than larger spaces, however, they are a lot less profitable. If you managing your own space, then you reequire less working capital. In opening a space, I often recommend 3 months of expenses to be in the bank account with access to another 3 months. I managed my own spaces for over 6 years.As Creative Density got more established and predictable, I lowered my own personal cash requirement to 2 months of expenses plus $300 a month for upgrades.Working Capital for two locations: (3 x $5,200)+(3 x $4,800) = $30,000 on hand——Basecamp——Basecamp is larger and has a staff member with around $21,000 a month in expenses. This means we had to budget $63,000 for starting working capital. This is not a fun line item to budget for, but most small businesses fail because they don’t have the right amount of capital to sustain them in hard times.Working Capital Total: $63,000Buying a Coworking Space vs. Starting a Coworking SpaceAt the start of 2020, I purchased a coworking space in Chicago using DenSwap.com For full disclosure, I’m one of the founders of DenSwap. The space was owned by a friend of mine and it sat there for several months without any serious offers, so I made an offer.The space was fully operations with over 100 members and 4500 square feet. It was generating a profit of around $20,000 a year, around $1600 a month.I needed to revamp the space with new build-out of a few offices for $45,000.I needed to buy new furniture for the offices for a total of $7,000Operations: $0 - taken care ofWorking Capital: It was making money, so only two months - total of $24,000.I purchased the place for $60,000 and after my investments, I needed access to a total of $136,000.The space was already making money so the risks were a lot lower than starting a new space. After the improvements, the space will be generating around $7000 more a month in revenue, with over $5,000 of that being profit. I expect my full payback to less than 18 months.SummaryThere are a lot of expenses that people need to consider when starting a coworking space. The main categories are building out and lease down payment, furniture, operations and IT, and working capital. I didn’t include advertising and marketing because there are a lot of ways to do that for free or minimal costs. There are some additional expenses, but that’s most of it.You also have the option of buying a coworking space. There are new services popping up like DenSwap that will allow you to buy all of the furniture and operations with one payment.I hope this is helpful. Comment if you have any other questions.

The age-old debate of Rent versus Buy for a home is not even up for debate in my mind. I will take owning a home every time over renting because of all the benefits that come along with home ownership like building equity. The last time I checked, rent money buys you nothing and has a 0% ROI. Paying rent money is like using dollar bills to keep a camp fire burning. You will be warm for the time being, but those dollars are gone forever and will never come back.Some of the benefits of owning a home include:increasing your personal worthtax deductions for homeownersbuilding your family legacycreating rental incomeIncreasing your Personal WealthLife with coronavirus has fostered a unique housing environment that currently benefits people that own homes in terms of building personal wealth. A shortage of homes for sale has created a more competitive environment for bidding. The basic principle of supply and demand is being controlled by homeowners who are choosing to instead hold their properties longer, therefore, causing a shortage of housing supply. In fact, home prices actually rose in the first quarter of 2020 in 96% of U.S. metro markets according to the National Association of Realtors (NAR). This is a radically different environment than during the subprime mortgage crisis when I was able to purchase a foreclosed condominium.Tax Deductions for HomeownersOwning a home provides some major tax benefits that could allow you to claim itemized deductions that could lower your taxable income. Normally, if the total value of itemized deductions is higher than the standard deduction, you would itemize. Otherwise, you should opt for the standard deduction.The standard deduction for the 2019 tax year is:$24,400 for married couples filing jointly$12,200 for single and married individuals filing separately$18,350 for unmarried heads of households.Mortgage Interest DeductionYou can deduct the mortgage interest from your taxable income under itemized deduction. Along with building equity, your mortgage payment includes a portion that goes towards interest from the loan. Usually, your mortgage service provider will send a statement to you that indicates how much interest you paid for the year.If your loan origination date was after Dec. 16, 2017 then you can deduct the interest up to $750,000 of mortgage debt ($375,000 if married but filing separately). If you refinanced a mortgage, the limit depends on the old loan’s origination date.Building your Family LegacyMy wife wants to sell her Chicago home because it is difficult to manage tenants from California. However, I am begging her not to because we would have wasted the past 11 years of owning and collecting rent. I want her to just pay off the final 19 years and be able to pass that home down to our kids as part of our family legacy. (*Update* She was able to refinance her Chicago home with a 15-year mortgage at a much lower interest rate. Thank you coronavirus. The perfect scenario of paying less money while gaining back 4 years.) My kids already have memories of playing in the Chicago house backyard while visiting Sue the T-Rex at the Chicago Field History Museum.Creating Rental IncomeReal estate has been good to me. During the subprime mortgage financial crisis, I acquired two key investment properties. Both of these properties have not only created the rental income stream we were looking for but also increased our overall net worth. You could try renting your apartment on AirBnB but most landlords would not be happy knowing that you did. Be sure to check your lease agreement if subletting is allowed else you will be in breach of your contract.