Car Forum: Help me pave my life...

[Zx2guy19]

Yes, the title is supposed to be funny because I'm asking a group of people I barely know to provide life guidance. But hey, what can I say...I like some of you.

 

Looking for advice on the biggest decision I'll make to this point in my life. Quick info:

 

• 26 years old, married with no kids (2 years out)
  
• 6 years of HR experience with a BA in HR
  
• HR manager at a Fortune 500 here in Columbus
  
• Own and operate 7 'rentals on the side'
  

 

For the past 3-4 years, I've been unhappy with the corporate world. I know a lot of people are, but something just doesn't work in my mind with it. For the longest time, I thought rentals were my "out", and that I'd eventually invest big into that (I don't even do 401k because I invest in them so much) and it would be my early retirement plan.

 

The last year has been bad...I've been unhappy at my previous job and switched jobs in Feb. and I'm not exactly shit giddy here either. I'm good at what I do and have a very fast career path (probably one of the youngest HR manager's at a company this size in Ohio), but none of that matters if I'm unhappy.

 

Over the last few weeks, I've been REALLY focusing on 2 things:

 

• Buying an apartment complex...focusing on the $1-2M/30-50 unit range
  OR
  
• Buying a franchised daycare...$3M investment
  

 

The numbers on both investments work...with the apartment, I could probably keep a rental or two.If I sold all my rentals, I could walk with around 250k+ profit as I've invested well in Columbus at the lowest points of the economy and my equity has grown tremendously with the bounce back of the real estate here.

 

My wife and friends think I'm crazy to walk from what I make now in HR+rentals to 'blow it all up' and sell everything and leave my job (it'd still be 12 months before anything was finalized...this stuff takes serious time), but I can't help but think, now is the time...young, no kids and enough time to make a mistake if it does happen. I have so much knowledge in real estate that at the very worst case, I have to start all over and use my knowledge to do it even better.

 

With a people management background (HR) and business experience (rentals), I honestly feel prepared for either one. For those of you who have experienced something like this...both owning a franchise/business or walking away from a corporate job to do something you're passionate about...what is your experience? Are you able to even afford internet to respond to this? Ha.

 

PS: I'd have insurance through my wife, so no worries there.

 

Thanks in advance, mysterious car forum 'friends'.

Edited June 14, 2016 by Zx2guy19

[RyM3rC]

I hear ya man. Corporate life is LOL. That being said, my family used to own a 4-unit building in UA and sold it because we were there every other week with fixing things, landscaping, mowing, cleaning, just nonstop bullshit.

 

So people go the other way too, from rental to corporate 8-5 M-F to get some freedom in their off hours.

 

I don't know what the rental market is doing other than casually seeing places around here renting out fast for what seems to me like too much. If you want to jump, go for it. Plenty of time left to put it back together if you crash & burn.

[Zx2guy19]

I hear ya man. Corporate life is LOL. That being said, my family used to own a 4-unit building in UA and sold it because we were there every other week with fixing things, landscaping, mowing, cleaning, just nonstop bullshit.

 

So people go the other way too, from rental to corporate 8-5 M-F to get some freedom in their off hours.

 

I don't know what the rental market is doing other than casually seeing places around here renting out fast for what seems to me like too much. If you want to jump, go for it. Plenty of time left to put it back together if you crash & burn.

 

Thanks man...yeah, I'm not too worried with the fixing things, etc. I do that crap now WITH a full time job. The rental market in Columbus is, and has been for awhile now, very strong. I was rehabbing a house the past few weeks and had people stop without a sign even on asking if I was going to be renting it. In the end, I never even had to put it "on the market", it rented before (thanks Turbs).

 

If I had to be honest, I'm leaning more towards the daycare. I honestly think with a franchise model, there will be less headaches. Sure, long hours and different work but I'm okay with that. Between my job now and the rentals I've been working 60-65 hour weeks for 3+ years. Doesn't bug me (now at least).

[Versluis]

When will the rental market peak? Prices continue to go up and up and up to where it doesn't make sense anymore to rent and just buy a home/condo etc. That would be my only concern is how long this will last.

[Lauren]

As someone who is self employees and has owned a business for over the last decade I will always suggest to work for yourself and make a go of it. However working for your self is such a double edge sword. It's sink or swim. Right now you have a stable income and your rentals are a bonus. Take away your safety net and now you have to wake up everyday hungry to keep succeeding. If there is an issue and you lose money or are in a dry patch your friends and family and wife will remind you how good you had it in the corporate world.

[Sully]

This is good. You probably couldn't have brought this up at a better time. I am sort of in the same boat. I recently switched jobs for better pay, but I hate it. I'm miserable sitting at a desk all day. I would love to do my own thing, but the risk is too scary, and I'm the one carrying insurance, so that keeps me from even trying to move out of the corporate world. FML.

[zeitgeist57]

EDIT: deleted my long, rambling response. Let me know if you want to grab coffee/lunch/beer to talk sometime.

 

As Dicky Fox said: "Roll with the punches. Tomorrow is another day."

[wagner]

Some very smart people told me that I should do what makes me happy and make "the leap", and they were right.

 

It is scary to leave everything you know and have to roll with the "keep what you kill life", but in the end you can't put a price on being happy.

 

My situation is different in that I'm still working for someone, but doing something that does not make me want to suck start a shotgun.

[Zx2guy19]

When will the rental market peak? Prices continue to go up and up and up to where it doesn't make sense anymore to rent and just buy a home/condo etc. That would be my only concern is how long this will last.

 

The rental market will always be strong...think about it: even when interest rates are at an all time low, people are still renting (aka, not buying). There will ALWAYS be renters.

 

 

As someone who is self employees and has owned a business for over the last decade I will always suggest to work for yourself and make a go of it. However working for your self is such a double edge sword. It's sink or swim. Right now you have a stable income and your rentals are a bonus. Take away your safety net and now you have to wake up everyday hungry to keep succeeding. If there is an issue and you lose money or are in a dry patch your friends and family and wife will remind you how good you had it in the corporate world.

 

I appreciate the insight. Not to sound like a douche, but I hope that what I've accomplished in the 6 years since I graduated college shows how motivated I am. Taking away my security net only pushes me further.

 

This is good. You probably couldn't have brought this up at a better time. I am sort of in the same boat. I recently switched jobs for better pay, but I hate it. I'm miserable sitting at a desk all day. I would love to do my own thing, but the risk is too scary, and I'm the one carrying insurance, so that keeps me from even trying to move out of the corporate world. FML.

 

Yeah man, I got quite a bit more at the new company too, but it means nothing to me because I still can't help but feel trapped. I'm lucky enough to have the insurance part covered. My wife doesn't make enough to even pay 1 of our mortgages (I don't mean that as an ass), so I can't count on that, but the insurance would be covered.

 

EDIT: deleted my long, rambling response. Let me know if you want to grab coffee/lunch/beer to talk sometime.

 

As Dicky Fox said: "Roll with the punches. Tomorrow is another day."

 

Thanks Clay, I'd love to hear your input. Love the quote too, ha!

[Zx2guy19]

Some very smart people told me that I should do what makes me happy and make "the leap", and they were right.

 

 

Thanks

[Lauren]

So in what you have accomplished is you graduated college and moved up the corporate ladder. You earned more money and were able to invest into properties because of that. I'm not trying to be a douche so please don't take it that way but one job fed the other. You are going to be left with only the other.

 

Your 6/7 properties right now. What much money a year do you net off them? Can you pay all your mortgages and living expenses from just those? Let's say you a an apartment complex what will you net after that? Again enough to cover living expenses and all bills paid?

 

How about the daycare. You are going to have to find a suitable building 4/6000 sqft. Given the current rental rate you are going to probably go office or retail building (however my new building I just signed a ten year lease on, next door we would share a wall would be prime for daycare we could be neighbors) is 15+NNN. So a month you are at let's say $7,000 a month in rent plus insurance and utilities. Let's figure an extra $900 for that stuff and then you have taxes and wages. So you are at roughly $12,000 a month on the high side plus franchise fees. For the first few months to a year how many kids do you expect to enroll before you even break even? What is the number of kids to make it profitable short and long term? Guess what your first year to year two you are probably going to be in the red and that is stressful as shit. You probably are going to have to invest your saving to keep it afloat. You just mentioned your wife's income can't support your bills so what are you going to do then? How long can you sustain yourself before it gets profitable?

 

My business is great because I am the service and my teachers service are always pre paid. I don't have merchandise so I have no over head other then rent and utilities. But you are giving to have staff and lots of it, equipment, buildings etc.

 

I ha e zero knowledge on real estate or day cares so if I am rambling about stuff you have covered then I am sorry. You are going to have to personally sign your life away for either of these options and if they don't pan out what's your game plan? Your credit will be ruined and you will be left with lawsuits and angry friends family and for sure a wife.

 

 

Lastly can our marriage sustain such a lifestyle change when things get "rough" because it will be rough.

[cstmg8]

The longer you wait, the harder it will be, unless you have a financial goal you're trying to hit first. Once you have more people depending on you it gets harder to risk.

Honestly the only safer way to do it is to keep your job while you build up your real estate portfolio. It sucks, and takes a lot of work, but no one said it'd be easy. LLC your rental business and keep your job until your new venture is making "fuck you" money. Then walk in to your 9-5 and say fuck you.

As for daycare, I have no idea what the margins look like, but it has to be a money maker. The initial investment would be big, and the key would be hiring a really good administrator.

With two kids at Goddard and a $2k per month, I often wonder where all of the money goes. I know the teachers/aides don't make s#@*.

 

Good luck and get on it!!

[Zx2guy19]

So in what you have accomplished is you graduated college and moved up the corporate ladder. You earned more money and were able to invest into properties because of that. I'm not trying to be a douche so please don't take it that way but one job fed the other. You are going to be left with only the other.

 

Your 6/7 properties right now. What much money a year do you net off them? Can you pay all your mortgages and living expenses from just those? Let's say you a an apartment complex what will you net after that? Again enough to cover living expenses and all bills paid?

 

How about the daycare. You are going to have to find a suitable building 4/6000 sqft. Given the current rental rate you are going to probably go office or retail building (however my new building I just signed a ten year lease on, next door we would share a wall would be prime for daycare we could be neighbors) is 15+NNN. So a month you are at let's say $7,000 a month in rent plus insurance and utilities. Let's figure an extra $900 for that stuff and then you have taxes and wages. So you are at roughly $12,000 a month on the high side plus franchise fees. For the first few months to a year how many kids do you expect to enroll before you even break even? What is the number of kids to make it profitable short and long term? Guess what your first year to year two you are probably going to be in the red and that is stressful as shit. You probably are going to have to invest your saving to keep it afloat. You just mentioned your wife's income can't support your bills so what are you going to do then? How long can you sustain yourself before it gets profitable?

 

My business is great because I am the service and my teachers service are always pre paid. I don't have merchandise so I have no over head other then rent and utilities. But you are giving to have staff and lots of it, equipment, buildings etc.

 

I ha e zero knowledge on real estate or day cares so if I am rambling about stuff you have covered then I am sorry. You are going to have to personally sign your life away for either of these options and if they don't pan out what's your game plan? Your credit will be ruined and you will be left with lawsuits and angry friends family and for sure a wife.

 

 

Lastly can our marriage sustain such a lifestyle change when things get "rough" because it will be rough.

 

In 6 years I've went from 9.50 an hour at Family Video to over 150k a year in gross income, all from the ground up. I'm pretty proud of that and realize I'm not a millionaire, but I'm sitting on over 600k worth of real estate and nearly 300k of it being equity. Not bad for starting at 21.

 

I NET around 45k a year on my rentals (gross is over 70k), and as it stands today, I could not pay all my bills with just that because I have so many bills from the rentals...make sense? I have 4 mortgages, credit lines, etc. I'd pay all that off and still have 250k left, which is why I'd have to sell them.

 

The franchise requires 2 acres of land and a 10,000 sq ft build out. It's approved for 180 kids and has an estimated gross income of $1.345M per year and 250k net. Part of the $2M requirement (400k out of pocket) is purchasing the land and the building- I'd own that. I have access to all 15 other franchise's income statements, so it's the real deal. I have the choice of 2 locations, Westerville or New Albany. One part of the daycare piece I forgot was that it takes 12 months for it to be built, zoned, etc., and they recommend continuing to work for another 12 months because it takes 10 months for it to turn profitable post-open. So I'm looking at 2 years before I can walk away. Still, I'm fine with that.

 

Keep the questions coming dude...I WANT you to make me think differently. I don't take it as being a douche.

 

The longer you wait, the harder it will be, unless you have a financial goal you're trying to hit first. Once you have more people depending on you it gets harder to risk.

Honestly the only safer way to do it is to keep your job while you build up your real estate portfolio. It sucks, and takes a lot of work, but no one said it'd be easy. LLC your rental business and keep your job until your new venture is making "fuck you" money. Then walk in to your 9-5 and say fuck you.

As for daycare, I have no idea what the margins look like, but it has to be a money maker. The initial investment would be big, and the key would be hiring a really good administrator.

With two kids at Goddard and a $2k per month, I often wonder where all of the money goes. I know the teachers/aides don't make s#@*.

 

Good luck and get on it!!

 

I agree, the longer I wait, the harder this will be. If I fail, I still have a degree I could fall back on (and great experience) and great real estate knowledge. I mentioned the numbers on the daycare above...it's pretty insane what people pay. It's the #1 growing service industry in the US and is basically technology replacement proof- what will ever replace it, especially as more and more families have both parents working?

 

PS- I do not LLC my rentals...there's a long waging war in the landlord world. I carry a HEFTY amount of insurance on myself in the case of an emergency, but I've chosen to keep them out of an LLC.

[Lauren]

I think what you have accomplished is awesome so props to that. I would never knock you down for that ( being a buckeye fan on the other hand :-/)

 

What's the exit clause if you wanted to leave the franchise?penalities? How long do ou have to stay a franchise? Any chance they can lien your building or land or come after your rental properties? Speaking of your rental properties and owning another business you better form LLc's for each and every property. A kid gets hurt and tries to sue your daycare all your personal property is going to come into play. Your franchise goes under all your personal property comes into play.

 

Right now one of your renters goes after you legally all your personal property goes into play. I would either LLC or INC all those investments ASAP. And if you wanted to take an extra step of pre caution LLC them in Mew Mexico. It's the only state that allows LLC's to be completely anonimous with public record searches.

[Zx2guy19]

I think what you have accomplished is awesome so props to that. I would never knock you down for that ( being a buckeye fan on the other hand :-/)

 

Ha...dick. ...I'm certainly not looking for a Scooby Snack...just trying to show I'm not some Joe Blow fuck boy that has a wild idea with nothing to back it up.

 

What's the exit clause if you wanted to leave the franchise?penalities? How long do ou have to stay a franchise? Any chance they can lien your building or land or come after your rental properties? Speaking of your rental properties and owning another business you better form LLc's for each and every property. A kid gets hurt and tries to sue your daycare all your personal property is going to come into play. Your franchise goes under all your personal property comes into play.

 

I am meeting with the franchise Friday to review all those details. I had an hour conference call with initial information and decided to move forward. I am meeting with an apartment complex broker this evening...shit's moving quick. To be clear, there would be no rentals to come after because they'd be sold to fund the 400k initial investment. Only asset I'd have is my personal house, and the franchise being in an LLC would cover that (and I'd keep my hefty insurance).

 

Right now one of your renters goes after you legally all your personal property goes into play. I would either LLC or INC all those investments ASAP. And if you wanted to take an extra step of pre caution LLC them in Mew Mexico. It's the only state that allows LLC's to be completely anonimous with public record searches.

 

Again, that's where the insurance comes into play. I'm not the only landlord that has chosen to keep their rentals out of an LLC...that opens up a whole new can of worms that most people aren't aware of, and most LLC's can be penetrated anyway. I carry enough insurance to cover my life, 3 times, ha!

[Diamonds]

Nothing motivates like being self-employed... period.

[Zx2guy19]

Nothing motivates like being self-employed... period.

 

Do you consider being a franchise owner self employed? Serious question...I'm not even sure how that's viewed from other business owners.

[Lauren]

I consider a franchise owner self employeed. Granted you follow policy and procedure of a larger corporate you are still on your own. Not every industry requires a franchise name to be successful and I think people waste their money paying FF's. However a think I would want to own a franchise for a daycare. A top name and reputation goes a long way when parents make the decision to send their kids some place.

[HotCarl]

The longer you wait, the harder it will be, unless you have a financial goal you're trying to hit first. Once you have more people depending on you it gets harder to risk.

Honestly the only safer way to do it is to keep your job while you build up your real estate portfolio. It sucks, and takes a lot of work, but no one said it'd be easy. LLC your rental business and keep your job until your new venture is making "fuck you" money. Then walk in to your 9-5 and say fuck you.

As for daycare, I have no idea what the margins look like, but it has to be a money maker. The initial investment would be big, and the key would be hiring a really good administrator.

With two kids at Goddard and a $2k per month, I often wonder where all of the money goes. I know the teachers/aides don't make s#@*.

 

Good luck and get on it!!

 

You literally hit every question I was going to ask.

 

1. You seem successful now, Why not keep your current situation until you make "fuck you" money?

2. I can't imagine a daycare NOT having insane margins. My GF is a preschool teacher in a well known daycare. Knowing what the licensed teachers (not just aides) make and what the daycare charges, add to that what kind of overhead are they looking at, the profit margins have be good.

3. While you seem intelligent in several areas, you're going to have to hire a really talented admin for your daycare who knows that specific business model through and through. A back round in HR will help a lot with your employee interaction but anything past that?

 

Personally I consider franchise owners as self-employed. Maybe not entrepreneurs but small business owners. You still took as much financial risk as anyone else who started from the ground up without a franchise license.

 

Is the apartment complex a build out or would you be purchasing a preexisting complex that's just for sale?

[Diamonds]

Do you consider being a franchise owner self employed? Serious question...I'm not even sure how that's viewed from other business owners.

 

It's not important how/what (regarding if a franchise owner is a true business owner).

 

The side of the meter you want is the feeling of "Oh shit, I need to make it happen as I am the decider of my own destiny" where your stomach lump stays large until your bank account starts to get large.

 

If you are taking RISKS to try and MAKE ALOT OF MONEY then you are doing the right thing.

[2highpsi]

Do you consider being a franchise owner self employed? Serious question...I'm not even sure how that's viewed from other business owners.

 

IMO owning a franchise is the WORST of both worlds.

 

 

The only people I know who "happily" own franchises, own portfolios full of them. They are mega rich and each one is merely an investment. None of the individual franchises make them "loads" of money, but they also don't require 24/7 oversight or intervention and they still outpace normal market returns.

 

Franchises still have a lot of the corporate problems that most entrepreneurs are trying to escape.

 

Do the math on how much the franchise will cost you over the next 30 years.

 

In that "cost" you should include:

- up front franchise fee

- annual franchise fees

- additional franchise fees assessed on gross receipts

- additional costs incurred from having to source X supplies or advertising from franchise instead of on the open market.

 

Once you have that total (in the millions) ask yourself if whatever they are bringing to the table (name recognition, discounts on supplies, etc) justifies the heavy price tag.

[Diamonds]

IMO owning a franchise is the WORST of both worlds.

 

 

The only people I know who "happily" own franchises, own portfolios full of them. They are mega rich and each one is merely an investment. None of the individual franchises make them "loads" of money, but they also don't require 24/7 oversight or intervention and they still outpace normal market returns.

 

Franchises still have a lot of the corporate problems that most entrepreneurs are trying to escape.

 

Do the math on how much the franchise will cost you over the next 30 years.

 

In that "cost" you should include:

- up front franchise fee

- annual franchise fees

- additional franchise fees assessed on gross receipts

- additional costs incurred from having to source X supplies or advertising from franchise instead of on the open market.

 

Once you have that total (in the millions) ask yourself if whatever they are bringing to the table (name recognition, discounts on supplies, etc) justifies the heavy price tag.

 

I agree, a franchise only works/pays-off when you have a bevy of them.

[Dharris89]

Brad, I appraise commercial real estate. If you have specific questions on apartments etc I may be able to help. I may have missed it but somewhere you said small property. Assuming you are not doing new, the MF market is very strong. Demand and absorption has started to slow but that's not surprising considering the thousands of new units saturating the market.

 

Even if you take the plunge on the apts, you may not have to quit your job. (I know you want to.) But you may still have time for a life outside. Management companies charge somewhere in the 3% to 6% range and they get to to the dirty work like repairs, background checks etc.

 

On the daycare side it all depends on the lease. Who (rhetorical) is the franchisee? How much expierience do they have? What is tenant vs LL responsible for? Term? Etc. Cap rates or GRM's can be all over the place. But once again, on a net lease and new building, there shouldn't be a lot of day to day issues once it's up and running. Good luck. Let me know if I can help.

[coltboostin]

• Buying an apartment complex...focusing on the $1-2M/30-50 unit range
  OR
  
• Buying a franchised daycare...$3M investment
  

.

 

WTF? Do you have any experience in a Daycare business? And how/why would it be so expensive? You could start up like 40 Subways for that LOL

 

 

I had 5 rentals at one time. I am down to one double. Cash out while the market is high, I think we are about at peak for home values, but if the cash flow is better than 35-40% market cap, just sit back and count money.

 

My recommendation, if you are not liquid with a minimum of 3 years reserved+your investment, just try a non-cor HR job unless you are willing to file BK if it goes belly-up.

 

My company for example is largish (2500+ employees, nation wide branches), but not at all cooperate. We have a "corporate headquarters" but the HR is a joke. Im shocked they get paid to do what they do to work as little as they do. You may love the change of pace coming from a rigid corp job.

 

Good luck in what you chose.

[zeitgeist57]

There's a whole lot of d*ck-sucking in this thread...I would challenge that business development/sales is as entrepreneurial as you can get while still having the "safety net" of group health benefits and product/service competitiveness through a corporation in a highly-competitive business landscape.

 

IMO, you can make smaller McSteaks and still learn from them; no need to go full-blown failure to claim that you took sufficient risks to succeed. I don't like how everyone claims some series of Facebook inspirational messages about failure is the key to success to justify blanking out in their lives.

 

Sorry, Brad...we can still meet, I just had to say something.