Buying a Business or Property?

Viewing 7 posts - 1 through 7 (of 7 total)

wolverine
Member
@wolverine
Join Date: 2003
Post Count: 11
October 2, 2003 - 10:44 am
Hi all,
I thought I’d throw this one into the mix to get peoples views.
I’m in my early thirties and earn a salary of around $150K. My home is fully paid off in Sydney and worth around $500K.
I’m now tossing up whether to start investing into property/shares. Or whether I should buy a business which can generate another cash flow which will allow me to invest in two to three years time.
I’m looking at staying in my job and purchasing a franchise that I can have under management. For around $450K I can buy a Video Ezy, Gloria Jeans, Michel patisserie etc.. that would generate around $100-120K net cash profir before interest and tax. I can also get bank funding on the business @50% so that $225K would be drawn down on my home equity @7% and $250K taken against the business @9%.
My ultimate aim is to be able to leave my employment in about 3-5 years and have a good cashflow being generated by upscaling my businesses to about 3-4 outlets.
ANUBIS
Participant
@anubis
Join Date: 2003
Post Count: 559
October 2, 2003 - 10:52 pm
Sounds great although I think Video rental chains are on the slide. Recent studies show that people are purchasing DVD’s at an extraordinary rate that is beginning to bite on rental turnover.
The US is also rolling out video on demand, similar to ordering a movie in a hotel room, people can order a virtual rental from their lounge room, negating the need for the middle-man at the video store.
wolverine
Member
@wolverine
Join Date: 2003
Post Count: 11
October 3, 2003 - 5:37 am
PB,
Do you have any prior experience in running your own buiness? i’m open to any suggestions on possible businessees or franchises.
Cheers,
W
hilary
Member
@hilary
Join Date: 2002
Post Count: 146
October 3, 2003 - 6:01 am
If you refinanced $200,000 and wrote covered calls on blue chip shares, you would be looking at about $4,000 to $8000 per month return. And if you used margin you can double that.[]
boneman
Participant
@boneman
Join Date: 2003
Post Count: 10
October 3, 2003 - 7:50 am
The business is a good idea and the one I would (did) go with. However it seems that you don’t want to work in the business. That’s fine and is a great aim for any business owner, but a lot of franchisors will require you to work in the business at least initially so that you at least understand it. I seriously considered a franchise business about 12 months ago and ultimately chose against it. However the research I did showed me just how many franchise opportunities are out there and how differently they can be run. Some are great. Some suck. The main thing to do is to find out exactly what is required from you before you sign up. The franchise council of Australia is a great place to start.
wolverine
Member
@wolverine
Join Date: 2003
Post Count: 11
October 3, 2003 - 9:25 am
Hilary,
I like your suggestion. Could you direct me to a web site/book/course/seminar where I can learn more about equity investing?
quote:
If you refinanced $200,000 and wrote covered calls on blue chip shares, you would be looking at about $4,000 to $8000 per month return. And if you used margin you can double that.[]
hilary
Member
@hilary
Join Date: 2002
Post Count: 146
October 4, 2003 - 8:18 am
‘understanding options trading in australia’ by christopher tate
and
‘the secret of writing options’ by louise bedford
are 2 great starters
peter spann who advocates shares to buy property is having some east coast seminars soon – see the company site http://www.freemanfox.com.au, there will be some b/s, but a lot of info, be prepared to be exhausted at the end
also, daniel kertcher teaches only shares – have a look at his site http://www.platinumpursuits.com
good luck – keep us updated[^]