Licensed Post Office for sale

This isn't a property for sale, rather just the LPO business.

Was just told about it this arvo so don't have financials, and apparently the current owner/operator is getting quite anxious to sell.

Interested if anyone has had anything to do with them.
First thoughts are there's limited scope to grow the business outside of population growth and it'd be a boring business to operate.

However, an angle is to buy a commercial property and move the post office into it, and hopefully push the valuation up significantly.

Probably not a whole lot I can contribute WW, however anecdotal evidence and a discussion a while back (I forget who with ) illustrated to me that Post Offices in general have been a declining business for a while now (obviously there will be exceptions) due to less postal traffic. Hence why they're trying to get any extra source of revenue they can eg. bill payments, merchandising, drivers license photos etc.

But hey, maybe I'm way off.

Old information.....as I researched PO's quite a few years ago.

Sell for 4 times gross profit (ridiculous IMHO)
Can expand PO & increase incme by selling retail products. (if room in PO to do so)

Older buyers like to buy the PO businesses as 9 - 5 with weekends off, minimal wastage.

WW
I know of one person who brought a small shopping centre prior to new shopping centre being planned & opened with a Coles & Target so he purchased PO as he was loosing a lot of tenants to new centre.

This particuar guy paid 4 times gross profit - which set the benchmark in our local area for PO's.

I know of a few other small PO's that don't make decent wages.


Regards
Sheryn

Steve, I thought LPO revenues must be on the decline too, at least from snail mail.

However, I remember reading somewhere parcel volume was up due to the popularity of online shopping.

Daily home delivery of mail seems exorbitant to me now that email is ubiquitous....and I wonder how long it will be before that service is scaled back - say to 3 days a week.

The other gotcha it seems is the gubbmint can control cash flow by re-negotiating commissions regularly.

My intuition is not to get involved with anything the govt has significant control over....however, there's a reasonable price for most things.

Sheryn said:

This particuar guy paid 4 times gross profit - which set the benchmark in our local area for PO's.

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Thanks Sheryn. Every bit helps to paint a picture.

I've only heard 2nd hand but the one I heard about has a turnover of 3m and they are asking 750k.

don't know how many post boxes and it has a small sales floor space (maybe 20-25m2).
and don't know what commissions are on various services.

I am disinclined to pursue it further.

will leave it for some 50 something public servant sick of working under some idiot boss. there must be a lot of them

WinstonWolfe
Is this PO the one on an island near Brisbane ?

L and P said:

WinstonWolfe
Is this PO the one on an island near Brisbane ?

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nope...... about 10km NNE of the cbd

L and P said:

WinstonWolfe
Is this PO the one on an island near Brisbane ?

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Magnetic Island has a PO for sale, but that aint near brisbane. Is there a PO for sale on an Island nr Brisbane? Bay Islands or Stradbroke?

Russell Island.

http://www.realestate.com.au/property-house-qld-russell+island-106810168

I am curious to know where in North Brisbane there is one for sale. I have looked but can't find it.

L and P said:

Russell Island.

http://www.realestate.com.au/property-house-qld-russell+island-106810168

I am curious to know where in North Brisbane there is one for sale. I have looked but can't find it.

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I've been told about it by an Asian mate. I'll phone the business tomorrow and ensure he got the story straight, and let you know. I googled this arvo and couldn't see it advertised anywhere.

Sheryn's example may be relevant in this burb. There's talk of a new rail crossing and I spoke several weeks ago with the LGA councilor at a party, and he confirmed eventual redevelopment of large tracts of nearby industrial land.

I don't want to buy it - just curious where it is

My little local post office is run by a lovely asian couple and I live in the area you described so i wonder if that's it

WinstonWolfe said:

Steve, I thought LPO revenues must be on the decline too, at least from snail mail.

However, I remember reading somewhere parcel volume was up due to the popularity of online shopping.

Daily home delivery of mail seems exorbitant to me now that email is ubiquitous....and I wonder how long it will be before that service is scaled back - say to 3 days a week.

The other gotcha it seems is the gubbmint can control cash flow by re-negotiating commissions regularly.

My intuition is not to get involved with anything the govt has significant control over....however, there's a reasonable price for most things.

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That's a good point about the online parcel stuff WW, now that you mention it I heard similar. I think I read an article on AP a while back how they were planning on targeting and benefiting from the big move online. Probably would have seen it in the AFR or BS if you want to try and find it.

I'm with you on the Govt. control thing though, no thanks! Would it be a similar story with billers etc as well? eg. why would AGL pay the post office 50c per bill when they can encourage more users to go online where it costs them nothing - 'let's just cut AP down to 20c per bill.' Just guessing though.

It's the Banyo Post Office.
I'll eat my hat if the shop floor area is 74m2....that's more like total area.

Steve, I agree LPO revenues look like they'll decline for a while yet.
Whether they die out altogether is difficult to say.

$700 000 Unbelieveable

On a happier note I'm glad it's not my nice local couple that are selling.

Hi Winston,


Thanks for the link, I just spent a very interesting 10 minutes perusing all of the post offices for sale right now in Qld. I was surprised to see so many up for sale.


Never having owned a business, I wouldn't have the first clue as to what to look for. My personality doesn't exactly endear itself to good customer relations. I recognise this and therefore have never gone into business. I reckon it'd only take me a week to have half the poulation disgruntled and walking out the door.


It appeared they placed alot of emphasis on the ;

• Number of private boxes - I think they get about $ 90 pa for hiring out one of the small ones.
• Mail runs - it looks like you don't want one of them !!
• Lease lengths - they all seem to advertise the long options - no rents divulged...

Didn't look super attractive to me, and having a casual chinwag with the father and son team that run our local post office, it cannot possibly be a barn burner of a business ??


What were your thoughts....

L and P said:

$700 000 Unbelieveable

On a happier note I'm glad it's not my nice local couple that are selling.

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was led to believe $700k is around 3.2x net income.
but I don't know owners' wages or loan interest.

Dazz said:

What were your thoughts....

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Dazz, as I alluded above, I am not inclined to get into a business where the govt controls your margins. You just end up a poorly paid public servant.

From the little I've been told, net profit is around 30% on $700k (don't think it included SAV). but I don't know what wages the owner couple pay themselves, nor their capital structure and interest.

I certainly wouldn't work in something like this myself for anymore than 3 mths because I have a low tolerance for repetitive mind numbing work and bogans, and Banyo has its fill. we call them Banyogans.

The only way I'd consider it is if it met most of these :

- I could net 40% with a stable manager operating it
- there was some strategic play such as a new Centro shopping centre that might be prepared to buy the business to get it relocated.
- Australia Post guaranteed a minimum return.
- I bought an unoccupied retail CIP for nicks and moved the LPO into it on an 8 year lease, then got a nice reval the equity of which I could use for a bigger fish.
- >5%pa population growth for 10 years with no loss of commercial/industrial businesses.

As it is, Australia Post want some schmuck to carry all the risk in fast changing times. How nice for them. Whatever happened to socializing the losses.

WinstonWolfe said:

As it is, Australia Post want some schmuck to carry all the risk in fast changing times. How nice for them.

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Yeah, same with the Leases Winston.

We had a quick squizz at an Australian Post distribution centre about 2 years ago. For some reason, the Landlords let Australia Post dictate to them what the lease is going to be...they obviously trade and bluff alot with their 'name'.

I think the conversation goes something along the lines of "If you want the stability and security of income that comes from having a Commonwealth Govt Tenant, you have to submit to our 'standard' Australia Post lease....and this is how much we are prepared to pay."

I read the Lease from cover to cover and saw the schedule of rates. Simply horrible. Started off at 5% nett and escalated at something pathetic like CPI or 3%, whichever was the less. Locked it up for a nice long 15 years, and then had 3 x 5 year options hanging off the end, and even then, they controlled the market reviews to a maximum of 10%. Joy....all control taken away for 30 years. Nice if you can get it.

On top of that, they had the Landlord paying for the gardening and all of the maintenance on the building. Yeah right.....if I wanted to pay for that I'd go and buy a house.

Suffice to say we politely declined to be Australia Post's Landlord, and moved onto far more lucrative ventures.

If that's how they treat their Landlord's, I simply couldn't imagine being one of a hundred little contractors. It would be truly ugly indeed.

I certainly wouldn't work in something like this myself for anymore than 3 mths because I have a low tolerance for repetitive mind numbing work and bogans, and Banyo has its fill. we call them Banyogans.

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This is why I was so surprised at the asking price. I just can't imagine it being that busy at that particular PO. I wonder if it has a lot of business from the bigger businesses in the area ?

Whilst i am talking to people who know that area - does anyone know anything about the land that is apparently being prepared and getting ready to release for sale up near the cemetary at Nudgee ? I keep meaning to go for a drive but never think of it until it's an inconvenient time.

The trading and bluffing of lease terms with the "calibre of the name" would also occur with bank leases if I'm not mistaken.

There were many sell-off's over the past decade on leaseback's and being retail type premises the banks' of whatever franchise ran the show with the lease.

Might be the same with Aus Post, most small LPO's are "mum and dad" business owners. Retail leases having no ratchetts nor land tax liability to the tenant.

The distribution centre that Dazz speaks of also indicates similar lease tactics, although surprising as a distribution centre by inference (and knowing what Dazz goes shopping for) is a hefty sized facility and still they aimed to run the show.....Go figure.

As to the business of a LPO, our local works pretty long hours and has lotto as well. I naively mentioned one day to the owner in passing that the lotto must be a saviour for him by way of income and he remarked that the post office provided considerably more return.