Help with situation

Discussion in 'Starting a Lawn Care Business' started by jgrand, Nov 7, 2012.

  1. jgrand

    jgrand LawnSite Member
    Messages: 29

    Ill give a little background on myself first. I worked with a landscape company while in college for five years. We did flower beds for a while then starting exclusively building decks, pergolas and some hardscaping. I mowed a few yards on my own too. I am out of college now (kinda, still in the process of getting my masters) and have a full time job. I started a landscape company on the side because I enjoy it and for extra income. I mainly do small residential jobs such as walkways, fences and pergolas.
    So here is the situation. I want to buy a lot that I really like for many reasons but the hoa fees are 200 a month. I will not build on it for a while and want to buy it now as an investment as the area the lot is in is a newly popular place. The price on the lot is very reasonable. The biggest problem is that the 200 a month in hoa fees would take away any return on my investment. In order to offset this I made an offer that I would do the mowing in the subdivision and in return my hoa fees would be free. The subdivision said they are willing to accept my estimate but would not extend free hoa fees. So, I am still considering submitting an estimate and using the profit to pay the hoa fees.
    The cons to this situation is that I do not have a commercial mower so I would have to get one and hope to pick up other yards in addition. But I also have a full time job so this would be difficult. Another con is that I don't have much experience with a commercial property this size. It's only about two acres and a small flower bed but I still don't know how much overhead and things like that would cost to give a fair estimate without losing money. I want to do it mainly to be able to get the lot mainly but I don't want to end up mowing and still end up paying when it's all said and done. I hope I explained this thoroughly and where everyone understands. Can anyone give me any suggestions or tell me what they would do? Pro's con's?
  2. Darryl G

    Darryl G Inactive
    Messages: 9,500

    Sounds to me like you can't afford it and have enough going on right now.
  3. ReddensLawnCare

    ReddensLawnCare LawnSite Bronze Member
    Messages: 1,651

    No go. More negatives than positives
    Posted via Mobile Device
  4. GreenI.A.

    GreenI.A. LawnSite Silver Member
    Messages: 2,131

    You made an offer to mow it for free, in exchange for the fees. Is the property what a $200 a month contract should be? Are you sure wou wont be expected to do other things around the property? such as pick up trash, blow dirt out of street in common areas? That all cuts into your time. You said you can't afford the $200 a month, but you can afford to instead give away $200 a month in service? Why not go pick up a couple more accounts instead with that time, even if you picked two lowball (no im not condoning lowballing) accounts that are $25 a week, that would give you your $200 a month you are looking for.

    Another thing many people don't think about when bartering is that it is income you technically earned, yet can not claim as income. By them paying you the $200 a month, and you paying them the money right back, it will show that you made an additional $2400 over the year in income. Of course though you would be taxted the income as HOA dues are not tax deductable. We often have contracts offer to barter with us, a few months ago we did some sub work and part of the pay was a trailer the contractor was selling. Rather than taking the $3k off the bill, what we did was I paid him for the trailer and he then paid me for the job. Yes technically, we had bartered the trailer into the price, but as far as our bank records show and taxes are concearned, we were paid for the job and bought the trailer. Doing it this way, that $3k still shows in our net income.
  5. ncls

    ncls LawnSite Senior Member
    Messages: 442

    Property is a good investment. If you will be using it soon. On top of hoa fees, you still have a tax bill. No way your property appreciates in value enough to cover taxes and hoa fees.
    They won't accept your offer, because they will fire you as soon as someone cheaper comes along. I have worked with many hoa boards. It is a nightmare. Run away.
  6. jgrand

    jgrand LawnSite Member
    Messages: 29

    Thanks for the replies guys. Not what I wanted to hear but thats why i asked.

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