Franchise vs. Rental Properties
 

OK so I've narrowed down to 2 options that I'd like to get the fine folks of S2KI's opinion on:

1. Franchise: I'm very interested in a few franchises that I've had personal experience as a customer and believe in the products. Below are my top choices in particular order:
- L&L Hawaiian BBQ
- Subway
- H&R Block/Liberty Tax Services
- Kumon Math & Reading Learning Center
- Boba milk tea store
- Jimmy John's (may have trouble qualifying on their net worth requirement though)

2. Rental properties: I'm also thinking of going back to my roots in SoCal and invest in some condos as rental properties since prices are really low right now, and with the cash on hand I can probably bag 2 to 3 condos and leverage the current low(ish) interest rate though I'm not sure how the banks would look at me buying 3 primary residents within a span of a few months, renting the previous one out each time...

Any thoughts/suggestions/opinions/comments?

Have you owned a business and/or run a full business unit before?

Those people who knows me from the beginning of S2Ki knows ;)

Yes, I have had experience running my own business(s) but decided to go back to corporate world for the stability.

:tipwink: Since you know the business world you know that even franchises require a level of owner involvement that you might not be able to give to the franchise without making sacrifices at your corporate job. Also a lot of franchises are not OK with absentee owners.

Also subway is a great franchise to own but this greatly depends on your market. If your market is as saturated as NY Metro than i wouldn't do it.

Personally if you just want an extra thing on the side do rental properties/real estate. Buy foreclosures/short sales, fix em up, sell em/rent em. This is more of a part time job. A franchise is a full time job.

You can run a franchise with minimal hours after you establish the business. I have a franchise right now. Ive been here every day or the past 4 months straight. Within 3-4 months i will be able to hire someone and just work on weekends to keep up with the paperwork.

Also Never put full trust into your managers. Also look at your ROI, Some of these franchises like mcdonalds and dunkin donuts have ROIs of 3-4 years. IMO thats too long. My current franchise, granted its hard to get approved, ROI is 1-1.5 years at most. Remember with a franchise your buying yourself a job.

I assume that you mean payback period, not ROI (Return on Investment, which is generally measured as a percentage, not in years).

Yessir sorry about that :tipwink:

If you can manage running the business than you also pick up the benefit of being able to expense a bunch of things, miles, phone and such. This might prove to be some of the greatest short term gains for you.

However the risks are not the same. A business could chew through all your money and leave with you nothing; while the rental property will be there renter or not.

If you have a corporate job I don't know how you'd start up a franchise, you'd need a trusted manager.

Have you run ROI projections on both?

I don't have first hand experience with a franchise. So I can't give you much input on that, but my family has 15 rental properties.
2 in CA and the rest in TX
It has worked out quite well for us. People are always going to need a place to live.

A franchise seems like too much work having to deal with day to day operations. Then having to pay them royalties for using their name must suck.

If you can do the basic DIY household things you can save yourself a lot of money and keep tenants happy.

We also just started up a small student tutoring business beginning this month and so far so good.


Good luck with your business venture.

Good info here. Keep them coming!! Mingster, I know you are asian so you must be a owner of a business.

lol.


anyway, im looking really hard into a JJ or Wingstop.

I would be going in with 2 or 3 friends to split the risk. (actually this is the most difficult part... finding non conservative friends)

Wingstop down here are ridiculously low maintenance in terms of day-to-day operation. If you've ever seen them: theres almost no kitchen.. fry station on 1 wall and saucing / potato dicing station on opposite wall (basic menu .. all they stock is wings, beans, and fries are cut fresh). most of the time i've observed its only a single, or 2 employees working in the "kitchen", and 1 or 2 at the front. 60% of their business is take-out ... seems really easy for someone with no restaurant experience (i.e. US)

i love reviving threads from the dead... :suspect:

what did you ever do Mingster?

I (like a dumbass) went to a Liberty Tax Franchise meeting in Virginia Beach about 4 years ago... it was sooooo stupid. I think you needed about 4-5 locations to possibly make enough to live... of course more locations = more franchising fees, etc.... it was the dumbest trip ever...i think at that time their average GROSS sales per location was about $35k per location.... ahhahaha...

like people said above, subway is way over done and you need slaves to work them.... and i think the net income from each one is probably about $30k if you are lucky (assuming you don't want to be that slave who works from open to close every f@#king day).

in the early 2000's i bought, rented and bought and sold about 35 houses... all city houses with starting prices between $5k and $35k.... i think i mostly made $15-$20k per house on average in the end plus all the cash flow from the ones that i rented for a few years then sold.... good business at the time but not now.... it is hard as shit to get a mortgage so there are not many buyers in my area.... i have a house that would have sold for $80k 5 years ago and i cannot give it away for $55k right now... :(

edit - if you bought and held and rented 15 houses at $700 a month each (assuming semi ghetto at that price)...you can probably net $60k a year if they are paid off... of course there is the issue of how to pay them off...lol..

Back from the dead! Mingster, I was unable to pm you so do you have any updates to this? I am in a similar situation, currently!