Buying A New Range

[standles]

All:

You may remember a post a while back by mtself entitled "help save our range". Thanks for all that responded. While we did get a repreieve we are not saved. Long story short.... The county owns the land, the land after 40+ years has now become valuable as development property, Our lease allows them to give us 16 days notice to vacate, the club is stagnant since now improvements can be done and finally as time continues pressure mounts.

What I am asking now is to feed off the collective conciousness that is this forum to help us get a new range. We currently have a line on ~60 acres of land zoned agricultural (1 house every 20 acres) and is a very good setup for a new range (electricity paved road access and remote). Buying the land and building our new range allows us to come under the protrection of the Florida range act.

We have some funds available (about 200K) but are going to need that for development. We talked to banks and they want 30% down, 8-8.5% interest, and a garantor (co-signer that has no legal claim to the property but is on the hook if default occurs).

Club background.

Current membership ~750 with dues at 50.00 / year and no monthly assesment.

Current folks that actively participate in the club/ club business ~40

Current club is in the woods behind a swamp down a gravel road in an old gravel pit.

Current yearly income ~15000.00

Club members have had several chances in the past to buy land but could never get past squabbling amongst themselves.

The 60 acres is going to cost 4K/acre and is ~45mins further out from current location.

One idea put forth to self fund the land purchase is to sell investment units. These are like bonds municipalities issue. Each unit would be 5K and return 8% with a payout at 5 and 10years. This would raise the capital needed to buy the land and then the club funds used to handle operation and development. Problem is that is steep for some to handle. At the last meeting 41 people attended. 27 voted to buy land, 6 signed a non-binding list that they were more interested in the 5K deal. The second part of this would be an increasse in dues to 100/year. I figure we will loose ~40% of the members due to the location change and the dues increase.

We are pursuing this but would like to hear other options. With all the knowledge here I am sure you have faced similar issues. I would love to hear how your club dealt with this issue. Even if you haven't directly dealt with this but you have an idea let me know. We are openly seeking solutions.

Thanks alot, Steven

[tightloop]

You need to increase the dues...100 a yr is a deal...the range I jointed in Kerrville was 350 initiation fee and 250 a yr...I paid it gladly...the range was remote, well maintained and always vacant, it seemed....do what ever you need to in order to get the land to keep it going...if you loose some members, others will take their place when you have the new range.....the loan interest is very high, seems to me like, and the guarentee clause is out of line..shop for another bank...go on line and see what you can do there...financed my old house on line...had 4 bids in 60 minutes....shop it and see...

good luck

[Front Man]

$100 per annum is very reasonable.

Interest should be 7-7.5%

Time to shop for $!

Try some ag lenders.

I'll come up with something later maybe.

FM

Edited July 8, 2006 by Front Man

[EricW]

Charge $250/year and go first class. I would LOVE to have a range around me with power and amenities and clean indoor plumbing. Build something nice and people will pay for it.

[standles]

Raising the dues is a must either way. But right now we need the purchase money or it doesn't matter. We need finance ideas to pursue the land deal and we need our ducks in a row in 90 days.

Didn't think about an AG company finance I will have to look into that avenue.

Thanks for the suggestions folks and keep um coming.

Steven

[Wildman]

I think you are going to find the guarantee clause pretty common for a corporation with no assets. We used to require it a lot in leases with Mom and Pop corporations. Keeps the office holders from skipping with the cash if tings get tough. It usually took the form of the corporate officers also signing as individuals to the agreement.

[Sean Gaines]

maybe see if you can get the owner to seller finance, with less money down, and a lower interest rate. Also you may consider haggling down 1k per acre, which would give you a little more oprerating money. Or make the owner a partner, if he is interested. another option is to buy the 60 acres with your bank granted everything seems high even though its not. With raw land or ag land, lenders tend to give higher rates than you would expect. Alot of people get discouraged because they compare the rates on their homes to land. Two different animals. Once you buy the land you could raise the price and sell lets say 10 acres to someone at a profit to offset the cost of your land purchase. People tend to pay more for smaller tracts, because there are more of them and they are more affordable and manageable. Its like anything when you buy in bulk you get a better price, when you buy in smaller quantaties, you pay more.Not too many people can afford 200-300k for just land. You may also want to look at other tracts of land in the area. You may also look into buying alot larger piece of land and subdividing it to pay for the range free and clear. thats what I would do, personally.there all kinds of ways to skin a cat you just have to find the right one.

I agree that if you build a first class facility you could feasibly recive more money in memberships

Hope it works out

PK

[Front Man]

I think Paper Tiger is on it.

I think 4k$ an acre is crazy but every land seller is hoping for a 1031 buyer.

But I wouldn't sell ten acres for someone to develope or you are going to be right back where you started, looking for a range.

Sooner or later.

The property needs to stay agricultural.

If it truely is desireable ag property you will have a renter and your organization will become a land lord.

A PM is on the way.

FM

[Jon Merricks]

Raising the dues is a must also think about having special members like life time status of something like that. At a grand or two each you could really raise some funds. I would also try to start a one time fee at a couple of hundred and then new members would have to pay a little more.

[Round_Gun_Shooter]

Another avenue is to look at buying the land and financing the improvements. You now have the equity in the land to show a lender you are serious about the endeavor.

For membership, going from $50 a year to $100 is doable. Over that, you will lose a lot of members. Another way to approach the cash issue is One time payment of $100 per member as an initiation or improvement assessment along with the $100 dues.

Much of the work in our local clubs is volunteer work. Equipment is rented and operators are members who know how to run it. They do the range improvements.

Local business sponsors may be another way to raise money for the improvements but they will want to see a business plan as will banks.

If you have the land as your start, you are in a better position to raise capital from investors.

Best of luck,

[tallgrass]

One of the problems you are going to run into is the environmental factor. As a shooter I think there is a lot of good advice in this thread. But as a banker the potential lead contamination would affect my decision.

The adviace to buy the land and then try to financie the improvements using the land as collateral is probably the best suggestion. Raising the dues is a must so you can show you can meet the payment schedule for the loan. There are banks that will make the loan w/o a personal guarantee, but you will have to look for them.

I would start with my membership list and see if any of your members have business relationships with a bank and get them to introduce the club to their loan officer.

The easiest way would be to get the seller to carry as suggested or to find an individual to carry the note. There are always people looking for a reasonable return on their $.

With rates going up, the potential lead contamination, and the uncertainty of your cash flow will keep the interest rate in the higher range. I think the 8-8.5% is resonable given the circumstances.

Good Luck.

[standles]

Thanks for all the responses. Here is where we stand..

We might have a bank that is willing to take the land as 50% collateral and our CDs as the other half then finaince 100% of the purchase at 8.5% interest. If this comes through we will most likely take advantageof the offer and get the land bought. FWIW the land across the road for us just went on the market for 5K/acre and has a pending offer on it already.

The other option we are looking at is forming an LLC of some core members (40) and each kicking in 5000. The LLC would then loan the money to the Gunclub Corp at 8% interst with payoff in 2 years. If the club defaults on the loan then the land reverts to the investor LLC and we sell at market to recoup losses.

With either option we then have to address the payback of the loan as well as improvements. The leading method is to assess each member a one time fee of 500 and raise the dies to 100/year. We would also make all membership come due at one time so club can guage yearly income better for financial purposes. New memberships wouold have to pay the 500 initiation fee and the 100/year dues.

One last hurdle is disparity in club members (those that care and want to see it advance and those that just want to pay a fee and shoot). I had floated an idea that the Gunclub corp offer 2000 investment units for 500 each. These units can be purchased only by gunclub members with at least 5 years of continuous membership. The untis can only be sold back to the Gunclub Corp. IF a waiting list is needed then first come first serve. The benefit is that these units is they are voting units. IF you want to have a vote in club business then you have to hold at least one voting unit. IF you just want to shoot and not be bothered by club business then pay your yearly dues and shoot away. This lets folks that are striving to better the club proceed and those that could care less stil have a place to shoot. What is does not allow is the shooter that could care less about the club until it is time to vote on an issue then riles up and bocks the effforts of the other members. If your going to be involved then be involved not just sit back until all the work is done and become a roadblock.

It is still being CUSSED and DISCUSSED

Steven

[tightloop]

Sounds like you are on the right track...good luck with it..

[38superman]

The county owns the land, the land after 40+ years has now become valuable as development property

This may be a little "thinking outside the box" but you say the reason you need to move is the commercial value of the current club.

Perhaps it needs to be devalued.

Without a doubt it has lead contamination.

With a gentle nudge, I wonder if the EPA might reclassify the county land such that it wouldn't be viable for commercial development due to extensive cleanup costs.

Tls

Edited July 24, 2006 by tlshores

[tightloop]

Good thought...

[Sean Gaines]

The county owns the land, the land after 40+ years has now become valuable as development property

This may be a little "thinking outside the boxl" but you say the reason you need to move is the commercial value of the current club.

Perhaps it needs to be devalued.

Without a doubt it has lead contamination.

With a gentle nudge, I wonder if the EPA might reclassify the county land such that it wouldn't be viable for commercial development due to extensive cleanup costs.

Tls

If its highly desirable comercial land, the developers will spend the money to have it cleaned up to meet the EPA standards.

[RIIID]

I'm on the BOD at the local sportsmen's club and for a couple of years we wrangled with raising dues. We finally did raise the dues and we are almost to the point of a waiting list again. Raising dues increased membership for us.

For 5 years we rented our range to a security company to add to our revenue it almost equaled our yearly dues income. We got greedy and pushed the rental fee up. They had their own range built with Homeland Security money, we lost a big chunk of change with that move.

One thing we are looking at is to lease a part of our ground to a wireless communication company for a cell tower. Around here they pay good money for key sites, we own three different properties( lake, outdoor range, and indoor range). I personally hate all the cell towers that have sprung up across the country, write a @#%$#@ letter. I've seen people lease out to three different companies on the same piece of ground, 3 times the income.

If you have a good population to draw from, a open public range on the weekends.

Rich

[standles]

The county owns the land, the land after 40+ years has now become valuable as development property

This may be a little "thinking outside the box" but you say the reason you need to move is the commercial value of the current club.

Perhaps it needs to be devalued.

Without a doubt it has lead contamination.

With a gentle nudge, I wonder if the EPA might reclassify the county land such that it wouldn't be viable for commercial development due to extensive cleanup costs.

Tls

Sounds good but the crux is they just don't want us shooting there. Under the current rules and regs they can have the sherriff dept go out once a year and fire .22's and it would be considered a range so no cleanup but no active club there either.

BTW.. That was one of the first things we thought of. The develpers wil develop all around it leaving it in the middle. We already went to the trouble of getting all the EPA stuff and best practices awards for it.

Steven

[EricW]

Build a great range and the right people will come pay for it. One of the biggest irks that I have with a local range is that they want to do everything via volunteers in order to keep the costs down. And that leads to everything being half-assed and run-down.

Well, personally, I'd just rather pay more and have everything done professionally. It's not the cost, it's the value that's being provided.

If you're providing nice facilities with sparkling bathrooms, covered picnic areas, and heated/cooled indoor meeting and dining facilities, that's worth a lot to me. A shooting range with the real estate and the foresight would do well to build a small park area away from the noise with a fenced-in jungle gym, benches, picnic tables and shade trees. Give people a place where the whole family can hang out comfortably for the day and watch people open their checkbooks.

[Genghis]

I'd be very hesitant to call the EPA in. They might close the range, or require the lead to be cleaned up.

If your financing requires a personal guarantee, it might be possible to give that person a right to take the land if the club defaults and leaves him holding the bag. Require the lender to notify him of any default, and give him a set period to cure the default, take possession, and assume the note.

There are many options for structuring the business. Would it be possible to structure it as a for-profit business? If not, it should be a nonprofit corporation or similar entity that provides liability protection. Also, don't forget to have an NRA range consultant come out and give you his advice, BEFORE buying the land. And you can get the NRA's range manual for about $50. It's a huge three ring binder, well worth it.

Finally, remember that selling life memberships will cut off any revenue from that member and leave you with the ongoing costs of serving that member. One prominent gun rights organization ran into financial problems because they failed to account for the costs of serving their life members (such as sending the magazines).

Not legal advice . . .

[standles]

All good points Genghis...

The EPA alrady knows about us. They use our range as an example of the EPA best practices for range monitoring in FL.

The Gun Club is already structured as a non-profit corp with an elected BOD. The club carries all the liability insurance etc. etc.

We also have a NRA certified Range consultant as a member. He is currently laying out the range on the new property and working with NRA to make sure the designs are up to snuff. HE was in on the initial walk over on the land as well. HE actually reccommended it as a buy due to some unique characteristics which are benefifical to a range.

We had discussed life memberships but it has been currently tabled. You make a good point on revenue ending with a lfe membership though. I will make sure I bring that up next time we discuss it.

Thanks again for all your help

Steven

Edited July 26, 2006 by standles

[shred]

When I was at some match in Central America (Nicaragua, maybe) some guys were telling me about their range. They had no land to start with so they got a bunch of guys with cash together and sold shares in the (to be bought) range. each share had a vote and nobody was allowed to own more than some small percentage to keep somebody from taking over.

A few years later the range was in the path of a new highway, so they sold the land at a profit and gave the proceeds to the shareholders. They then bought a new range and had twice as many people want to buy in..