Which one of above is better
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Property Investment vs Buying small business
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It depends.AAT Accounting Services - Property Specialist - [email protected]
Fixed price fees and quick knowledgeable service for property investors & traders!
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which one are you good at? is it a pre existing business with pre existing proven track record and nothing funny hidden in the paper work?
i studied BCOM, id never run a business. too much stress for my liking. how many businesses succeed?
but hey dont let me put you off. if you have a flyer of an idea or a mint business on offer and you think you have the businesss knowledge, it might be more your cup of tea.
its not which is more profitable imo. its more which are you good at.
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To throw my 2cents in which might not worth much, but if we take say a café, bar, etc as the business then you can perhaps make some comparisons.
With something like this you can potentially get a lease, fit it out for much less than the cost of a house, but you wont be able to borrow much so will need to fund yourself or borrow against property.
I view property as the best 'base' to create wealth from as it gives you these options to borrow against for some more high risk endeavours. Better still if your property portfolio produces good cashflow it can buy you time setting up business and getting cashflow from the business. Most businesses fail because of this sort of inertia in getting cashflow coming in, and underestimating the costs and having fairytail ideas of people turning up wanting to give you money for something you think is valuable, but most others don't.
With a business, say you spend 50k fitting out a café/bar, say the lease is also reasonable, if you can get punters in to create cashflow and profit then the business can then be valued based on these earnings, so in some ways its easier to create value in a business than in property (harder to increase rents etc unless developing). You can then sell the business as a going concern based on earnings, with say 50k fixtures and fittings, but 200k plus worth of goodwill from the established earnings.
The problem is creating the earnings in the first place, getting punters in, getting them spending (unlike property where a house has got a willing market ready to rent to immediately). Know the market better than any one else, know what customers want better than everyone else, see an unmet need, and realise it most likely wont work anyway but be ready to lose money and learn from it and repeat until you figure it out. Having a big cash flow property portfolio means you can do this, fail, repeat, fail repeat, unlike a lot of small businesses where they pour all there savings in, give it there all fail, and are left licking wounds for next decade while they recover financially.
Other businesses obviously different, im just using something ive had experience with, be interested to hear others thoughts on this and how important having an established property portfolio has been to making a start up possible.
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Originally posted by marklowes View PostTo throw my 2cents in which might not worth much, but if we take say a café, bar, etc as the business then you can perhaps make some comparisons.
With something like this you can potentially get a lease, fit it out for much less than the cost of a house, but you wont be able to borrow much so will need to fund yourself or borrow against property.
I view property as the best 'base' to create wealth from as it gives you these options to borrow against for some more high risk endeavours. Better still if your property portfolio produces good cashflow it can buy you time setting up business and getting cashflow from the business. Most businesses fail because of this sort of inertia in getting cashflow coming in, and underestimating the costs and having fairytail ideas of people turning up wanting to give you money for something you think is valuable, but most others don't.
With a business, say you spend 50k fitting out a café/bar, say the lease is also reasonable, if you can get punters in to create cashflow and profit then the business can then be valued based on these earnings, so in some ways its easier to create value in a business than in property (harder to increase rents etc unless developing). You can then sell the business as a going concern based on earnings, with say 50k fixtures and fittings, but 200k plus worth of goodwill from the established earnings.
The problem is creating the earnings in the first place, getting punters in, getting them spending (unlike property where a house has got a willing market ready to rent to immediately). Know the market better than any one else, know what customers want better than everyone else, see an unmet need, and realise it most likely wont work anyway but be ready to lose money and learn from it and repeat until you figure it out. Having a big cash flow property portfolio means you can do this, fail, repeat, fail repeat, unlike a lot of small businesses where they pour all there savings in, give it there all fail, and are left licking wounds for next decade while they recover financially.
Other businesses obviously different, im just using something ive had experience with, be interested to hear others thoughts on this and how important having an established property portfolio has been to making a start up possible.
Thanks for your comment. You are correct. I am looking for a business where I can still keep doing my day job and hire some one to run the business. It can be very small business to generate cash flow. Which can be used to get loan for property.
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