Does the class know!

Somtimes i am not sure if every one is on the same wave length, and since reading,posting , listening and learning, esp on SS i would like to spell out my interpretation on ips, and related property, its my opionion so here goes,

land increase is inevitable, they dont make much of it,any more, and you will hear the like of john fitsgerald talk of the land content % relating to ip's but its the use of our , incomes, being ,it ,of a job or small buisiness that should be used as the primary veichle allowing you to grow the portfolio,
some instances for you are , on cable, i saw an interview with a guy hat had three perfectly good ip's in germany, during one of our recessions he was threatened with repo, as his tennents left and lived with familly, smarter than most , one of the propertys, he purchased a photo coppier, and was happy to sell copies as long as he paid the mortgage and the young fella behind the counter, covering the payments, another ip, he rented three cheap cars from it allowing him to get through the tough times, but also providing enough income to keep them , ironically today they are known as Quick copy and avis,
another way of looking at land is like , KFC as i understand it, the owners of the brand name , purchase the land , build the new store, and lease the owners the rights to selling the product, the actual owners don't really care of the chicken profit so much, as they only require the land to be babysat and paid by OPM" Other peoples money " whilst increasing in value as land does, The big M does the same , but their branding is so good , that they can buy 1m in land build the store and sell/lease the franchise for 10 mill in a year thats 1000% land increase in 1 year, who care s about the burgers, as long as the leaseee is paying off the million mortgage for the owner,

small buisinesses perhaps should be looking at buying the shop/ they trade from so that as time goes on the shop creates equity too , so starting a cafe, to break even after mortgage payments iis not always a bad thing, the income might be nill after costs but the land content might be + 250k, nice years work when you have three,

for me i will be using these case studies and build my construction/ property maintenance buisiness , as a financial veichle to buy and service property, with the awsome bonusess to be able to value add at cost.and using OPM to cover tha mortgages, they will be simple properties , midle range plus some.
So providing the staff a paid, the profit goes toward value adding and growth of the property portfolio, regardless how the market swings
thanks craigb;)
 
small buisinesses perhaps should be looking at buying the shop/ they trade from so that as time goes on the shop creates equity too

The small biz owners my age who are retiring "successfully" own their own property. The property has value, of course, but security of tenure while they have run their biz has been even more important.

In the same way a res block may become more valuable through rezoning, a commercial property becomes even more valuable. You can't just decide to buy a commercial block 5k out of town and make it work. You may be happy to live there though.
 
the value is all relative to location , buying 5 k out of town , who knows in ten years it might be a new suburb , and you might own the shop, ;)
 
Somtimes i am not sure if every one is on the same wave length, and since reading,posting , listening and learning, esp on SS i would like to spell out my interpretation on ips, and related property, its my opionion so here goes,

land increase is inevitable, they dont make much of it,any more, and you will hear the like of john fitsgerald talk of the land content % relating to ip's but its the use of our , incomes, being ,it ,of a job or small buisiness that should be used as the primary veichle allowing you to grow the portfolio,
some instances for you are , on cable, i saw an interview with a guy hat had three perfectly good ip's in germany, during one of our recessions he was threatened with repo, as his tennents left and lived with familly, smarter than most , one of the propertys, he purchased a photo coppier, and was happy to sell copies as long as he paid the mortgage and the young fella behind the counter, covering the payments, another ip, he rented three cheap cars from it allowing him to get through the tough times, but also providing enough income to keep them , ironically today they are known as Quick copy and avis,
another way of looking at land is like , KFC as i understand it, the owners of the brand name , purchase the land , build the new store, and lease the owners the rights to selling the product, the actual owners don't really care of the chicken profit so much, as they only require the land to be babysat and paid by OPM" Other peoples money " whilst increasing in value as land does, The big M does the same , but their branding is so good , that they can buy 1m in land build the store and sell/lease the franchise for 10 mill in a year thats 1000% land increase in 1 year, who care s about the burgers, as long as the leaseee is paying off the million mortgage for the owner,

small buisinesses perhaps should be looking at buying the shop/ they trade from so that as time goes on the shop creates equity too , so starting a cafe, to break even after mortgage payments iis not always a bad thing, the income might be nill after costs but the land content might be + 250k, nice years work when you have three,

for me i will be using these case studies and build my construction/ property maintenance buisiness , as a financial veichle to buy and service property, with the awsome bonusess to be able to value add at cost.and using OPM to cover tha mortgages, they will be simple properties , midle range plus some.
So providing the staff a paid, the profit goes toward value adding and growth of the property portfolio, regardless how the market swings
thanks craigb;)

Yep; I'm with ya on all this.

We have written into the Contract for our recent business purchase that we have first right of refusal on purchasing the property should the owner want to sell.

Doesn't stop him from jacking up the price to a ridiculous amount to stop us from doing it so he could sell it to his kids etc, but at least we have a show at it.
 
Most here are realy deep financial thinkers, i wonder what ponders through the minds of ordinary folk, on weekends, it must be like an empty abyss, or somthing, lol,
 
Most here are realy deep financial thinkers, i wonder what ponders through the minds of ordinary folk, on weekends, it must be like an empty abyss, or somthing, lol,

I often wonder this too.

I think more people may be thinking about what time to catch up with their friends, what to wear at the bar, or what movie to watch and or what friends to invite for dinner, or what football game to watch etc.

In terms of the small business owner, i see many greek/italian/chinese families running a cafe or small shop on a side street. they have owned the shop since day 1 and make a good living from it and afford the good family cars and sometimes the big houses (with concrete backyards). But when they retire, they either hand the shop onto the next generation or flog it.

The aussies though, rent their boutique shop or trendy cafe in a mall (or in a busy street strip) and expect to make a good living while paying high rent.

I may be generalising too much here but there seems to be a strong pattern between ethnicity and the way people run their shops...

One real world story comes to mind, i knew of two new australian ladies of asian descent who wanted to start their own business. so they made clothes at homes and got their friends to make other clothes and do repairs and they rented a market stall at Jamieson markets in Canberra and built up a name for themselves at the markets only. Another person i know (an aussie), took out huge loan to rent a shop in a mall and to fit it out, she bought clothes in from china and tried to sell them. This person started their business life with a 6 figure debt (because of the lease they had commited to and the fitout of the shop), on the other hand, the 2 new australian ladies at the markets had bugger all debt and were earning profit almost immediately (and as far as i know are still making a good living).

Meanwhile the aussie has since folded and is now crying foul over shopping mall tactics. Another aussie guy i know, got a package from the public service about 10 or so years back, and immedaitely went into a canberra shopping mall selling dvds as an independent. i gave him 18 months at the time. He survived the first christmas but wasn't there the second christmas - he basically folded as soon as sanity opened their doors in the same mall.

it seems that some people just don't have the business acumen to open or run a successful business - and not wanting to be sound stereotypical, many of these people are long term aussies and yet the successful ones are of greek, italian or chinese heritage.

food for thought.


g
 
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Has it occurred to you that not everyone is into money? Or finance. And there is nothing at all wrong with that.

Most here are realy deep financial thinkers, i wonder what ponders through the minds of ordinary folk, on weekends, it must be like an empty abyss, or somthing, lol,
 
I think more people may be thinking about what time to catch up with their friends, what to wear at the bar, or what movie to watch and or what friends to invite for dinner, or what football game to watch etc.

I spend a lot of time thinking about those sorts of things, too :)
 
it seems that some people just don't have the business acumen to open or run a successful business

That should read "most people", given the statistics of most businesses failing within a year. I asked a very successful small business owner (ie he is now a very big business owner!) whether he thought it was a huge risk when he quit his job and started his business, given th track record for those who have gone before.

He just looked at me and said "Don't under-estimate how incompetent the average small business owner is!". He has gone on to buy out at least four of his competitor companies along the way...

If you know for sure you are better than others at what you do then starting a business can be a very lucrative option...
 
in the eyes of the general public, you are only "better" if you -

a) can get in front of the car ahead in peak hour.
b) drive a BMW X5.
c) have a fridge that orders your food over the internet.
d) are a union member.
e) can talk, in depth, about the TT special last night around the water cooler.

other than that, you're just a tall poppy.
 
I think 95% of the general population spend maybe as much time as we do thinking about wealth creation etc, but the difference is they don't do anything about it.

It's just a new year's resolution, or a good intention and stays a dream.

Or, if they do something, it's the very very basic version of an attempt to do anything - a bit of savings in the Bank (which ultimately gets spent on a doodad or two), or a bit of salary sacrifice into their super fund and their PPoR mortgage, and a bit of a dabble in shares that they get as hot tips from their mates and watercooler co-inhabitors.

The other 5% are the ones who do something about it other than the above.
 
I've had similar thoughts but i sort of think that there's not much benefit to me, if i buy a property complete with existing business, or if i just buy a property, rent it out, and an existing business moves in and rents it?

It sort of seems like higher risk vs lower risk

If the business takes off, then i have an improoved business name/customer base/etc, and can start francising soon...

If the business fails, then i'm left with workers and the bank to pay...

I'm probably going about it the wrong way, i haven't spent alot of time thinking about it :D
 
Its not paying the dead rent thing, but knowing your rent will double soon that is scary, perhaps you should think about it, :D
is it that the greeks,italians, and chinnese, have seen property values grow for 2000 years in the old country, and the aussies, only 200, couple it with the she'll be right mate , and WOW what an interesting recepe, :D
 
Has it occurred to you that not everyone is into money? Or finance. And there is nothing at all wrong with that.

Of course there is nothing wrong with that.
But there is also nothing wrong with being 'into money' and thats where this forum is great.
I would never yap like i do on this forum to my social group of friends for this risk of creating jealousy.
Here its great to meat like minded people who what to create a better financial future for themselves.
 
In regards to owning the business premises.
There are positives and negatives.
The positives are outlined above, the main negative is that it chews up capital, especially if ylds are very low relative to price.
 
Yep; I'm with ya on all this.

We have written into the Contract for our recent business purchase that we have first right of refusal on purchasing the property should the owner want to sell.

Doesn't stop him from jacking up the price to a ridiculous amount to stop us from doing it so he could sell it to his kids etc, but at least we have a show at it.

The secret is to word the clause so that if there is an offer he is minded to accept you can get a contract on identical terms and are given 48 or 72 hours to offer same.
 
the main negative is that it chews up capital, especially if ylds are very low relative to price.
I also think that owning a business freehold might be fine but I've seen plenty of deserted shopping strips whereas the big malls (where a business owner would be paying rent) seem to 'stay around' longer.

Regards
Marty
 
I'd like to buy the building I'm in, as someone else mentioned - the strongest motive for me is the security of tenure. Though I'm not as worried about that these days as I used to be.

Problem is I can't afford the place yet. One day my pretty, one day... :D
 
Here's a good example (for South Aussies especially) of why it can be good to buy the business premises you're operating from.

The LeCornu business sold in 2008 for a grand total of $1.37M, turnover of $70M and profit of $3M. After 50yrs of operation, all the business was worth was $1.4M! No doubt in part due to the entry of huge amount of competition and cheap imports in recent years (Ikea etc).

Now if the LeCornu family didn't own the land underneath the business, wouldn't be too much to show for 50yrs of operation would it?!

So anything can happen in business, where as property tends to plod along over the years and give you a stable, predictable return - and in the case of your own business premises, can be a good retirement bonus.
 
Not strictly those that have a buisiness premises, , i do building and maintenence, but as part of the entity all profits will go towards the IP procedures , so the buisiness owns the propertys while others pay them off, the maintenence guys do the work at my cost price as well,
 
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