[Christina]

Fantastic articles! Thanks so much for posting these. If you ever run across anymore be sure to post them. I really enjoy reading stuff like this. And you're right -- very valuable lessons learned!!!

Christina
PS - Thanks so much for sending me that business plan. It helped tremendously. I have been working on developing mine as well. I was really ignorant about how helpful a business plan really is.

[C Lenart]

Christina:

Good to hear that the site is up and working again. It was strange to see the Fitness Think Tank off the air.

The Business Plan focuses you on figuring out how you're going to build and keep a customer base. It's a good thing to remember that you can have all the certs in the world but you still have to be able to keep and attract clients.

Finishing off my last class at UCLA this term. Taking Randy's Fitness and testing course. Yesterday, Randy found out about a job from his company in San Fran for 6 figures. He doesn't know if he'll take the job and he doesn't know if he'll continue to teach our class till the end of the term. Hope he stays on till the end of the term so I can finally finish the UCLA program. Told him 6 figures doesn't go very far in San Fran with a family.

I'll post more articles if I can find them.

Curt

[Christina]

Hey Curt! Give me the low down on Randy's job offer! (Remember to keep in mind anyone can read this info.) You're right -- the cost of living in San Fran is SO expensive. We were living downtown in a condo (580 square feet) that was MORE EXPENSIVE than our custom home in Texas. (We had a hot tub, pool, 17k square foot lot, etc!) It blew me away! The PARKING SPACES in our building were being sold to non-condo residents for something ridiculous like 50k! Needless to say, it was a little too expensive there for my taste! People love living there though.

Randy would probably live outside of the city in one of the suburbs since he has little kids but it is still really expensive. However, since home prices in southern CA shot up so much in the early 2000s (is that how you say that?!?) you guys now have a similar cost of living.

[C Lenart]

Christina:

Only thing I know on Randy's job situation is that he found out a few days ago that his company had an opening for a Fitness Manager for an "account" in South San Francisco. No actual job offer has been mentioned as of yet. I know the company he would be working with very well as I used to trade in and out of that company's stock. Very large biotech firm.

Before I got into the Fitness Biz, I was big into finance. You know that all already.

Back to Randy. Cost of living is very high in South San Francisco. You're talking places like San Mateo, Palo Alto, and Redwood City. Even "if" the job pays 6 figures, you're talking $2-$3 G's per month for even the smallest rented condo. Add that to having to raise a family with two parents working, and he wouldn't have much left over by the end of the month. Sounds like you have experienced the San Fran housing drain on your pocketbook already.

Randy thinks that his salary "history" will be bumped up by having a six figure income on his resume, and this will in turn allow him to still get six figures if he decides to bail out of San Fran. Personally, I think his reasoning is flawed. Something about Fitness 101 and basic economics at play here.

To begin with, why would a company pay someone 6 figures to manage a fitness account somewhere in Texas or any other place other than a high cost area like San Fran or New York or Boston? Maybe companies will offer $50-$75K, but six figures? I doubt it. Why? They don't have to. More than enough takers at $55K when the cost of a huge house is $250 K.

On a small note, San Fran has a higher cost of living than even L.A. That's been the case for years. I lived in both areas and that's been my personal experience. On "average", San Fran housing is usually about 30% higher than comparible property in L.A. To make a go of it in L.A or San Fran these days, you either have to bought in when real estate was still cheap about 10-15 years ago like I did or make boatloads of money.

That's the case for most real estate. You have to buy at a price and hold it till the going gets better. For example, I sold off my properties that I had since the early 90's in California last year and I bought up some properties in Ohio. 15 years ago, people were bailing out of California and unloading properties for a song. Today, the same is true in Ohio.

Next week, I'm going out to Detroit, Michigan to look at several "distressed" commercial properties. I love that term "distressed." It's that feeling that you get when a fitness client hasn't payed their bill by the end of the month.

Good stuff.

Curt

[Christina]

Hey Curt,

When we moved to Texas the first time it seemed like everyone at my husband's company who was from CA got to keep their CA salaries. This was back in the mid to late 90s during the tech boom and they were all working for a major computer company. I am not sure the same thing would happen in corporate personal training. I understand where Randy is coming from but you make a good point too. It's a tough decision for him.

What kind of commercial properties are you looking at?

[C Lenart]

Greetings Christina:

You may be right about the 90's and the tech boom but i believe you're also right in pointing out that keeping a high salary from a high cost to a low cost area in the Corporate Fitness business is really a big crap shoot. Lots of risks with a family and all to support.

Lately, I've seen a lot of folks bail out of my brother's company in Santa Barbara because they couldn't afford to buy a house with the high cost of living even with a big salary. My brother works for a company in the tech communication business. Just two weeks ago, one of the senior managers at my brother's company who was just about Randy's age (38 or so) left the company so he could relocate to Seattle to another job where he could afford a house for his young family. Once again, this is the tech business. The Corporate Fitness business may be totally different but these kind of quickee moves to high cost areas just makes me queasy.

Here are two commercial properties I'll be looking at in Michigan and Ohio later this week. I've got a few more to look at but these two are on the "A" list for now.

http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=14265980&RecentlyViewed=true&ItemIndex=1&PgCxtDir=Down

http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=15065983&RecentlyViewed=true&ItemIndex=1&PgCxtDir=Down

Curt

[Christina]

Hey Curt,

I know what you mean about affordable property. My husband was a VP at a couple of different technology companies when we were in CA and we would say to each other, "If this is expensive for us, how do people who make 40 or 50K a year make ends meet?" The high cost of living never ceased to amaze us!

What are you planning on doing with these Michigan properties? They look really nice!

Christina

[C Lenart]

Christina:

Heading off to Detroit today. The deal with commercial properties is to buy them at below replacement cost of the building and then rent to them out at for about 10% the cost of the property. For example, if you purcased a property for 100K, you want to get at least 10K a year in rent, net expenses.

Of course you want to modernize the property as much as possible with new parking lots, entrance signs, landscaping, inside improvements etc. Very much like residential property except you're renting by the square foot in the case of commercial property. The object is to drive higher rents with strong capital appreciation of the property.

Found out last night at class that Randy's interviews for the job in San Fran are today. We now made it through 4 weeks of Fitness Testing. Can we make it through week 5 without the instructor moving on? Don't know.

Last night we did skinfold evaluation and testing in class. Some folks are obviously better than others at doing this kind of testing as the skin around my pec muscles this morning feels like a piñata in a poking contest.

Curt