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> Rent or buy shoplot to start a business?

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TSririruru90
post Jan 14 2020, 12:33 AM, updated 7 months ago

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Hi all, would like to ask opinions on those who have experience in small/medium business

Which one is better if I want to start a business? Renting or buying a shoplot?
yklooi
post Jan 14 2020, 12:38 AM

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QUOTE(ririruru90 @ Jan 14 2020, 12:33 AM)
Hi all, would like to ask opinions on those who have experience in small/medium business

Which one is better if I want to start a business? Renting or buying a shoplot?
*
do you have enough money to sustain your business operation for 12 months or longer?
if ok, then can "consider' buying.
does your business need high amount of costs to do renovation?
if yes, then can "consider" buying.
is your business sure got business in the current place of operation?
if yes, then can "consider" buying.
is the purchased shoplot easy to sell off when needed and make some money from the sales?
if yes, then can "consider" buying

hmm.gif what more ahH?
CRaider2
post Jan 14 2020, 12:41 AM

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depends on the nature of the business and your capital available. if money not a problem no brainer. what is your exit strategy for your venture? can you afford the payment if your business fail or dont do well? generally it is best to own if you have the means but you have to be practical on your capability. if your capital is limited and business gives far greater return than owning a property why invest in the lower yielding one?
TSririruru90
post Jan 14 2020, 12:51 AM

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QUOTE(yklooi @ Jan 14 2020, 12:38 AM)
do you have enough money to sustain your business operation for 12 months or longer?
if ok, then can "consider' buying.
does your business need high amount of costs to do renovation?
if yes, then can "consider" buying.
is your business sure got business in the current place of operation?
if yes, then can "consider" buying.
is the purchased shoplot easy to sell off when needed and make some money from the sales?
if yes, then can "consider" buying

hmm.gif what more ahH?
*
I planned to open a tuition centre. If by sustaining business operation, will I loose money if there are no students for the centre?
TSririruru90
post Jan 14 2020, 12:53 AM

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QUOTE(CRaider2 @ Jan 14 2020, 12:41 AM)
depends on the nature of the business and your capital available. if money not a problem no brainer. what is your exit strategy for your venture? can you afford the payment if your business fail or dont do well? generally it is best to own if you have the means but you have to be practical on your capability. if your capital is limited and business gives far greater return than owning a property why invest in the lower yielding one?
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I was going to start a tuition centre. If I own the property but there are no business, as in there's no student for the centre..will I loose any money from that?
CRaider2
post Jan 14 2020, 12:59 AM

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QUOTE(ririruru90 @ Jan 14 2020, 12:53 AM)
I was going to start a tuition centre. If I own the property but there are no business, as in there's no student for the centre..will I loose any money from that?
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you could rent out the unit and top up the difference with the bank. you still own the property. I think you need to give the business proposal more thought especially your exit strategy and scenario planning. You already considered no students. Why do you feel you dont have the ability to attract students? Maybe need to consider recruiting reputable teachers? Frankly owning or not should be at the bottom of your list of considerations after you have considered the viability of the business.
yklooi
post Jan 14 2020, 01:00 AM

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QUOTE(ririruru90 @ Jan 14 2020, 12:51 AM)
I planned to open a tuition centre. If by sustaining business operation, will I loose money if there are no students for the centre?
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QUOTE(ririruru90 @ Jan 14 2020, 12:53 AM)
I was going to start a tuition centre. If I own the property but there are no business, as in there's no student for the centre..will I loose any money from that?
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after you bought it, if no business, you need to close your business.
if you close the business, you need to sell off the shoplot

you will lose, the legal fees, the agent fees, the bank loan interest, the time taken to re sell the shoplot and the possible drop in the price of the shoplot
TSririruru90
post Jan 14 2020, 01:13 AM

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QUOTE(CRaider2 @ Jan 14 2020, 12:59 AM)
you could rent out the unit and top up the difference with the bank. you still own the property. I think you need to give the business proposal more thought especially your exit strategy and scenario planning. You already considered no students. Why do you feel you dont have the ability to attract students? Maybe need to consider recruiting reputable teachers? Frankly owning or not should be at the bottom of your list of considerations after you have considered the viability of the business.
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I was just thinking what is the worst possible thing that could happen and what would I loose if business doesn't go well..thanks for the reply. I'll give it some more thought
TSririruru90
post Jan 14 2020, 01:18 AM

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QUOTE(yklooi @ Jan 14 2020, 01:00 AM)
after you bought it, if no business, you need to close your business.
if you close the business, you need to sell off the shoplot

you will lose, the legal fees, the agent fees, the bank loan interest, the time taken to re sell the shoplot and the possible drop in the price of the shoplot
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Is it compulsory to close the business?
And Instead of selling it, is it possible to rent it out?

Sorry for asking many questions, I'm newbie in this
yklooi
post Jan 14 2020, 01:21 AM

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QUOTE(ririruru90 @ Jan 14 2020, 01:18 AM)
Is it compulsory to close the business?
not compulsory, if you have the mean to sustain a losing business
And Instead of selling it, is it possible to rent it out?
can you rent out that shoplot with ease?
is that your intented business to begin with?
can that rental provide you with positive cash flow when you still have bank loan to repay?

Sorry for asking many questions, I'm newbie in this
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TSririruru90
post Jan 14 2020, 01:59 AM

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QUOTE(yklooi @ Jan 14 2020, 01:21 AM)

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well not intended to rent out.. I mean it's just another plan when the business doesn't go well so at least when renting out there's still some income to pay back the bank loan or maybe some part of it
yklooi
post Jan 14 2020, 02:59 AM

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QUOTE(ririruru90 @ Jan 14 2020, 01:59 AM)
well not intended to rent out.. I mean it's just another plan when the business doesn't go well so at least when renting out there's still some income to pay back the bank loan or maybe some part of it
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can that rental provide you with positive cash flow when you still have bank loan to repay?
how much can you rent out and how much do you need to repay the bank loan?

while you are doing that, how much do you need to recover from the "failed" business (that lead to the need to resell the shoplot)?
if you think you can do that without problem, then of course it is good to buy one. for it is an asset for your business after you have fully paid off the loan....then from there, if your business is in need of money in future, you can mortgage that shoplot.....
Boomwick
post Jan 14 2020, 11:30 AM

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Rent first if do not have much backing behind.
Buy is a long term commitment.. in case business bust.. u still can move on.

Buy ad need service loan.. unless location very good can rent out cover
kbr3813
post Jan 14 2020, 12:17 PM

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QUOTE(yklooi @ Jan 14 2020, 01:21 AM)

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Hi,

I would think renting would be better as your core business is tuitiion not property investment. With property yields so low today the property owner would be subsidising tour rental. Just my personal opinion. Thanks


rapple
post Jan 14 2020, 12:56 PM

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Before you start your business, I would imagine you are already giving tuition. So how much you are getting a month and you would know by heart whether your business can sustain buying the property or renting from someone.
TSririruru90
post Jan 14 2020, 02:20 PM

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QUOTE(yklooi @ Jan 14 2020, 02:59 AM)
can that rental provide you with positive cash flow when you still have bank loan to repay?
how much can you rent out and how much do you need to repay the bank loan?

while you are doing that, how much do you need to recover from the "failed" business (that lead to the need to resell the shoplot)?
if you think you can do that without problem, then of course it is good to buy one. for it is an asset for your business after you have fully paid off the loan....then from there, if your business is in need of money in future, you can mortgage that shoplot.....
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I'm not sure about that...what if I just pay it lump sum without using a bank loan?
Would that be a better option?
TSririruru90
post Jan 14 2020, 02:23 PM

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Thank you all for the opinion
yklooi
post Jan 14 2020, 02:32 PM

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QUOTE(ririruru90 @ Jan 14 2020, 02:20 PM)
I'm not sure about that...what if I just pay it lump sum without using a bank loan?
Would that be a better option?
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Sure OK if you think you want to make money out of it n you are sure you can make profit from selling it
wayton
post Jan 14 2020, 03:51 PM

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QUOTE(ririruru90 @ Jan 14 2020, 02:20 PM)
I'm not sure about that...what if I just pay it lump sum without using a bank loan?
Would that be a better option?
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You still lose.out opportunity cost as the lump sum money which can generate interest like Fd or other return in investment.
That is why Bank seldom buy premise for their branches.

Also, there are cost and liabilities associated with property holding.

Not a good idea to pour large sum when you are unsure the business is viable or not at start.
smartinvestor01
post Jan 14 2020, 04:14 PM

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QUOTE(ririruru90 @ Jan 14 2020, 12:33 AM)
Hi all, would like to ask opinions on those who have experience in small/medium business

Which one is better if I want to start a business? Renting or buying a shoplot?
*
Based on my opinion, it really depends on what type of business you are looking at and the risks exposure and the total capital reserve you can hold..

As you are planning to start a very small business (consider it a micro business), you would need a low monthly commitment unit to start up your business which means lower monthly installments to the bank..

Like your business, tuition, at least you not need to keep stock or inventories. But then again, you are subjected to risk of selling your shoplot if the shoplot price is too high.

This post has been edited by smartinvestor01: Jan 14 2020, 04:16 PM
howszat
post Jan 14 2020, 10:26 PM

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QUOTE(yklooi @ Jan 14 2020, 12:38 AM)
do you have enough money to sustain your business operation for 12 months or longer?
if ok, then can "consider' buying.
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NO. That is not the reason to consider buying.

Buying, or not buying, has to do with returns vs costs = profits.

Nothing to do with how many months.

yklooi
post Jan 14 2020, 10:58 PM

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QUOTE(howszat @ Jan 14 2020, 10:26 PM)
NO. That is not the reason to consider buying.

Buying, or not buying, has to do with returns vs costs = profits.

Nothing to do with how many months.
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NO.....Buying, or not buying, is not always has to do with returns vs costs = profits.

there could be some investors that are NOT asking for profits....

that could be due to his available of money and his choices....

that is WHY it is about months of sustainability

your choices is PROFITs...his is not...read his postings...

This post has been edited by yklooi: Jan 14 2020, 11:09 PM
hft
post Jan 15 2020, 01:02 AM

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QUOTE(ririruru90 @ Jan 14 2020, 12:33 AM)
Hi all, would like to ask opinions on those who have experience in small/medium business

Which one is better if I want to start a business? Renting or buying a shoplot?
*
RENT
howszat
post Jan 15 2020, 01:07 AM

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To get back to the TS question:
- rent if you can put your capital to better use with your business.
- buy if your have the capital that does not provide better returns
icemanfx
post Jan 15 2020, 05:47 AM

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QUOTE(ririruru90 @ Jan 14 2020, 12:33 AM)
Hi all, would like to ask opinions on those who have experience in small/medium business

Which one is better if I want to start a business? Renting or buying a shoplot?
*
You are placing the cart in front of the horse.

saikia2046
post Jan 15 2020, 06:31 AM

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Renting with minimum renovation is the safest way to start a business.
rapple
post Jan 15 2020, 08:44 AM

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QUOTE(yklooi @ Jan 15 2020, 12:48 AM)
12  months or more .....has a lot of money
my choices & preferences

Don't change the topic.
are all businesses aimed for profits in mind?
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QUOTE(howszat @ Jan 15 2020, 12:53 AM)
Already told so many times. They can;t survive if they don't have profits.

Please get that into your head.
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Profit or loss of a business can be manipulated.

Huge profit but no cash, business collapsed instantly.

Cash is the most important aspect to sustain any business.
mmweric
post Feb 1 2020, 11:42 PM

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QUOTE(ririruru90 @ Jan 14 2020, 12:33 AM)
Hi all, would like to ask opinions on those who have experience in small/medium business

Which one is better if I want to start a business? Renting or buying a shoplot?
*
Unless your core business is renting out shop lots it would make more sense to rent and put your capital to better use. At today’s rental rate the shop lot owner is most probably subsidising your rental.

 

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