Problem: 

In 2021, KLAW Industries was little more than an idea shared by a couple of college students. To turn that idea into a real manufacturing business, we needed a factory.

The problem? We were college students and certainly didn't have buy-a-factory money.

Puchasing a Building For Cheap:

We searched for industrial properties with delinquent property taxes, hoping to find an owner willing to sell at a significant discount.

After months of searching, we found a property facing county tax foreclosure at the end of June 2021. Unfortunately, we didn't discover it until June 6, leaving us just three weeks to act.

We quickly negotiated a deal to purchase the building for $15,000 and assume $60,000 in unpaid property taxes.

Fortunately, we had recently won $65,000 in two business competitions and had enough personal savings to cover the difference.

Over the next three weeks, we found a lawyer, coordinated with local government officials, and purchased our first factory for approximately $75,000.

Renovating the Factory:

Then the real fun began! The building needed extensive renovations before it could support our manufacturing operations. We did the following ourselves, including:

• Cleanout: Removed 10 dumpsters' worth of accumulated garbage.

• Office Renovation: Completely remodeled and insulated the office, adding five large windows for natural light.

• Factory Improvements: Installed windows, ventilation fans, insulation, and heating to improve working conditions.

• Employee Facilities: Added a kitchen and two bathrooms with showers.

• Lighting: Replaced all existing lighting with energy-efficient LEDs, securing a grant to help fund the upgrade.

• Painting: Repainted the entire building, inside and out.

I hired and managed contrators to do:

• Office framing and drywall: Paid a contractor to put new framing a drywall in the office.

• Spray foam insolation: Paid a contractor to spray foam both the office and factory (6000sf in total).

• Office Circuit Breaker: Paid a electrian to install a new electrical panel in the office.

Through these improvements, we transformed a neglected industrial property into a functional manufacturing facility that could support KLAW Industries' growth.

Using the Factory to Finance Growth:

After investing another $100,000 in renovations, bringing our total investment to approximately $175,000, we refinanced the property at an appraised value of $500,000. This allowed us to take money out of the building and reinvest that capital into growing KLAW Industries.