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I went the other way. I had my own consulting practice as my main source of income for 10+ years. It earned good money but it was always harder to get bank finance. Also, it can be the same trap as a full time job, i.e. the more you earn the more you spend. On the side we’ve also progressively built up our restaurant business over the past 10 years (with my wife and sons managing it). I’m at a stage where i can make the transition to full time property/restaurant development and throw away the suit and tie. To swing the last deal (a cafe and 3x apartment development) I wound down my consulting practice and got a job with the government. It pays abut $50k less than what I used to earn. So, why did I do it?
(a) it frees up time – i can hold down a full time government job and manage the development, because in comparison to working for myself this job isn’t that hard (b) The bank loves it – even if you earn more as a business they tend to officially, or unofficially, discount your earnings, whereas banks see government income as more solid. (c) It frees up mental capacity- that’s been the biggest benefit for me and i didn’t realise it until I did it. When you run your own business you have to be fully mentally engaged. It’s hard to describe, but I’m seeing a lot more opportunities a lot more clearly (now that I have my brain back).I never thought I’d end up working for the government. I only have to stick it out for another 6-8 months, so its bearable. Anyway, it works for me in my unique situation. Not saying it will work for you, but hopefully just illustrating that there’s many ways to skin a cat.
I’ve looked at it seriously twice (2 years ago and 7 years ago). These were specialist financial planners. Both times recommended by people I know well. Both times I walked away after my own due diligence. Looking back, had I taken their advice it would have been financially disastrous.
Two observations.
(1) They sell pre-packaged investment products irrespective of whether the products are right for you. They don’t have to do much original thinking. I wanted to include buying my own office as part of the portfolio, along with shares etc, but it was clear both times the financial planners had no idea of how to go about it.
(2) They can’t help themselves from loading up their recommendations with all sorts of insurance cover. So much is recommended to go towards ‘asset security’ there is little room for capital allocated to actually generating asset growth. That’s the biggest telltale sign for me.I was a Director at a big 4 accounting firm for five years, I’ve done the securities institute course and I have been an examiner for CPA exams, so I’m not naive on financial matters. However, my speciality is business planning, not investing. I know enough to respect other fields and try not to do other people’s jobs for them. I was genuinely looking for someone who could give good advice and let me get on with my own work.
I found the whole experience disappointing. On a positive note its made me become much more actively involved in my own investing and its paid off well. But still, I wouldn’t have minded a bit of proper help too. In the end I concluded that its far too important to put in the hands of rebranded insurance salesmen masquerading as financial planners.
I’m doing a shop/apartment development in Ashwood at the moment. The designer is Ron Asling of Studiothreedesign. He has been good at hooking me up with all of the other services required (surveyors etc).He shares a building with a lot of them and they have a little cluster going in Pakenham to service a lot of the new developments out that way. He’s also came along with me to help haggle with Monash Council over planning issues. He is based in Pakenham but will travel to Ashwood. Ph 5941 1258
I’d contact the planning department and arrange a pre-planning application discussion (even if it the site has ‘provisional’ planing approval, its really a pre-purchase meeting that you are seeking to have). I have done that 3 times now in Monash Council. I went ahead with two of three projects based on those meetings. I backed away from one project, which was fine by me because it meant I avoided a potential disaster. There’s always another deal to move on to.
Don’t rely on the advice given at the front desk, you’ll get conflicting views from different people.The juniors will hedge their comments to cover their a**es, same with any council. Make a formal appointment with the most senior person you can, which will usually be David Lyall. Go in there prepared and professional. I approach it from trying to understand the intent of the guidelines and how best you can meet them (the ‘vibe’ of the thing) rather than a literal interpretation of the rules. You will find that some things are absolutely fixed and can’t be changed, other things are flexible in the context of the overall package of what you are proposing. If your intent is good, you are bringing investment and renewal to the area and it is consistent with the vibe of the thing, then you can have an open discussion with a bit of give and take. Its rare that you will get absolute statements from them, but it should give you a good enough feel for whether to go ahead or not.
Good luck.
Thanks thecrest, thats really helpful.
I been watching this thread for a while now, its a good quality discussion. I’m interested in people’s opinions on motels with restaurants.
My wife and I are in the restaurant business. I find the sites, do the deals and fit them out, she (and family members) operate them. Then, I fix things when they break! We’re on our third restaurant now, and I recently bought another site to do a small cafe and apartment development. Its all going well and we like it, but we won’t do it forever because its a lot of work. We’re thinking of getting into a country motel in the next 5-10 years. My impression is that motels with restaurants are seen as a mixed blessing, because the restaurant typically breaks even at best.
Hopefully it could mean that the right motel with restaurant could potentially be undervalued relative to its full potential. If so, that’s good for us because we’re confident we can do well at the restaurant side as well as the motel side. However I could be dead wrong too. I’m interested in people’s opinions on the relationship between restaurants and motel valuations.
I agree with Michael, you can look at it in many ways and it will provide different insights.
‘Yield’ is a return on something. There are different somethings.
Michael’s first example, based on what he originally paid, is a yield calculation of the return on his capital employed. The later example is a yield calculation of the return on assets (at current market value) They’re both good to know.Mostly people use yield in the context of return on current asset value, so that they can compare like with like.
