Is this a really stupid time to start this??

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M

mpen

Free Member
Jan 11, 2008
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Preston
  • #1
    I have been a Chef for over 36 years and have a very good catering background, I an presently employed on a decent salary for a chef in these parts 45k+ in what looks at the moment a fairly safe job.

    I have a house with a mortgage thats finished in around 5 years, taking into account falls of property prices in the area I have around 150k equity in it (at the moment)

    I have very little pension fund in place, Im 51 this year......now the question

    Near where I live there has been a bakery for sale for around 18 months, family owned for around 50 years, fully equipped the bakery has two large rooms, and a retail shop, upstairs it has a large 6 roomed flat, the property needs around 20k spending to bring up to a decent standard and is on the market for 219k this price hasn't been reduced for 18 months. is on a busy road with parking at the side, the flat has secure parking and its in a decent area, 3 miles from the city centre.

    I have two different bakers that want to rent the rooms out (they supply different products to hotels and cafes) I will keep the retail shop, sell their products and turn it into a good sandwich shop,I will employ someone to run this, upstairs I will rent out, I've had the flat looked at and been told to expect around 450 a month for it.

    I'm going to put a cheeky bid in of around 145k bearing in mind all the work that needs doing 20k, I will go up to 160k, I have no savings and will have to use the equity in my house to fund this (if I can find someone to lend me anything)

    Like I said is this a stupid time to take something like this on?
     
    D

    dave1928

    Free Member
    Dec 13, 2008
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  • #2
    All depends on how much the business does in profit bearing in mind how long it will take to pay business loan off etc, as your on a good wage now.
    If you think you will earn similar money anyway then its worth doing as you will have a business to sell at the end and any increase in property value, and be your own boss..:)
     
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    T

    Tej

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    Oct 26, 2008
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  • #3
    From your post, I assume that you are not giving up your job, and this will be something extra. If so, I would go for it, if you can buy the property at the right price. The idea seems good and am sure you have done your research as to the viability of the sandwich shop!,, if so should be a win/win situation. IMO
     
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    M

    mpen

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    Jan 11, 2008
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  • #12
    nyima said:
    Thanks for sharing this valuable information.Really this is very stupid time to start business.Also now his time can't find the real price by selling your product.
    Click to expand...

    Like I said in my first post, I have been in the catering industry for over 35 years, I think I know it, where I presently work we haven't been touched at all by this down turn, in fact our year on year growth is up 26%
     
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    J

    JustOneUK

  • #15
    nyima said:
    Thanks for sharing this valuable information.Really this is very stupid time to start business.Also now his time can't find the real price by selling your product.
    Click to expand...

    what a crock of Chinese spam.:D WTF does "Also now his time can't find the real price by selling your product" mean? :|

    Sounds like a great idea if you have the permission to sell sandwiches/other products and to let the flat.
     
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    deniser

    deniser

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    Jun 3, 2008
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  • #17
    They say that the recession is the best time to start a business because if you can make it work then, then you can establish yourself in the market place long before your competition come along. You will also not be trading on some false expectations for the future.

    If the figures stack up now then go for it. You should be able to get a great deal on the premises as prices have fallen enormously in the last 18 months.

    My philosophy is always to do the opposite to everyone else.
     
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    T

    thebigIAM

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    Jan 11, 2009
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  • #18
    Interesting dilemma. If you have a spouse I would canvass his or her opinion. If you took this on board you would have to be prepared for a certain amount of unforeseen hassle ('cos there always is some) and it would be handy to have a contingency fund of some sort. You might find banks are still sniffy about lending at the moment though you might not need to borrow.

    Someone I know ran a sandwich shop/deli but also used it as a base for an outside catering business. Might this also suit you?
     
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    M

    mpen

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    Jan 11, 2008
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  • #19
    Thanks for all your positive feedback, I have just spoken to the vendor, the property was first priced at 260k 24 months ago the lowest she will go is 190k,I was hoping for a bit more of a drop, if my plan fails to work the property can easily split into two houses.
     
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    H

    HollyMolly

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    Mar 11, 2009
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  • #21
    Hi Mpen,

    Much has happened in the last 24 months, property prices have dropped considerable & lenders are far less willing to lend. It might be worth pointing out that you're in a very strong position to purchase the premises but you are only able to source xxx amount of funding, it also might be worth explain that property prices could realistic fall much further in the coming months and this might impact your borrowing capacity further!

    Find a win/win for the two of you, sometimes the price might not be the number 1 priority!

    With your background and experience in the catering business you could do very well with this business. If it feels right go for it, you don't want to look back in 5 years and kick yourself for not going for it!

    Onwards & Upwards

    Dan;)
     
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    Cornish Steve

    Cornish Steve

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    Jul 4, 2005
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  • #22
    In many respects, this is an excellent time to start a business. You can hire good people for a song, you can purchase supplies (new and used) at rock-bottom prices, interest rates are at historic lows, etc. etc. What matters most, though, is that you have a sound business strategy, a target market looking for your solution, a solid and objective financial plan, and the ability to execute flawlessly.
     
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    C

    CVRO

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    Mar 25, 2007
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  • #23
    I'd argue with the vendor that the price the property was first marketed at 24 months ago has no bearings whatsoever in the current market. I'd say the vendor could end up accepting less than the 190K mentioned. Of course, that would depend on the vendor's current financial position and other people's interest in the property.
    The key question is: Would you be willing to lose out on this deal? If so, you could play hard ball. Start the negotiations as if the asked price was 190K, which in a way it is as the vendor said (s)he would be willing to accept it. You've got make the vendor sweat...
    The problem, of course, is that the vendor might be in no rush to sell it. If that's the case you'd need to review your strategy and if the numbers do not add up walk away.
    Again, as somebody else has mentioned, how would you feel in 5 years time if you do not go for it?
     
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    M

    movietub

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    Nov 6, 2008
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  • #24
    This seems a fairly safe bet.

    I'm not sure if now is a good time to open a new shop 3 miles out of town - but you are a very experienced catarer and I do believe really well run places can always do well.

    The main reason you should do it is you have sod all to lose! From what you say the bulk of the investment is in the property and improvements. You are in a very strong position to buy and the market is very low. You also comment that you have very little pension/savings which is no doubt a growing concern. For that reason alone a good property investment is the most likely way improve your financial future.

    And you must surely be keen to go your own direction after 35 years! I think I lasted more like 3.5 years employed before realising it was my way or no job at all ;)
     
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    K

    Kay

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    Feb 8, 2005
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  • #25
    I think it sounds like a terrific idea - assuming the numbers stack up. In addition to sandwiches, if you have the space, you could also do ready meals that people just have to bung in the microwave. So many people just don't have the time or knowledge to cook even the simplest thing. If I were in the UK I'd love to be involved in such a project. Good luck!
     
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    M

    mpen

    Free Member
    Jan 11, 2008
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  • #26
    Kay said:
    I think it sounds like a terrific idea - assuming the numbers stack up. In addition to sandwiches, if you have the space, you could also do ready meals that people just have to bung in the microwave. So many people just don't have the time or knowledge to cook even the simplest thing. If I were in the UK I'd love to be involved in such a project. Good luck!
    Click to expand...

    funny you should say that, where I work at the moment we've opened a farm shop, I started making ready meals around 10 months ago, I sell around 3.5k worth a week now, they are real good money makers, trouble is I'm making it all for someone else
     
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    B

    BusinessIdeas

  • #27
    I really think that this sounds like a great plan. I would have thought that it would be difficult to lose in the long run. You are not giving up your income so that puts you in a fairly safe position. If you are really sure of the rental position then it sounds reasonably foolproof, because the value of the property must go up again eventually. If you can cover the mortgage payments with the rental then I think you should go for it. If this is uncertain then think twice. I always like to leave a back door open when considering a new project, so try and think of what would happen in a worse case scenario - Best of luck with this - Gina :)
     
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    M

    movietub

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    Nov 6, 2008
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  • #31
    Don't think there is a best bank anymore - just the best deal on the day you need it.

    If you speak to a decent financial advisor they can normally squeeze another few% with a little adjustment of your financial situation. They know what the banks use to determine lending limits and how best to present the information to get the max.

    I still think the property alone sounds a reasonable investment so you should percivere! As this is a business move it's not at all unusual to take out a joint mortgage with a property investor etc. That may help. Would reduce modernisation costs for you too.
     
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    B

    Bri

  • #32
    what does your gut instinct tell you, the one thing we're all good at here is informing of all the pitfalls and minefields. At the end of the day if your gut instinct rules your heart thats what you have to follow.;) If it works brill, if it doesent well you tried.
     
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    M

    mpen

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    Jan 11, 2008
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    Preston
  • #33
    Bri said:
    what does your gut instinct tell you, the one thing we're all good at here is informing of all the pitfalls and minefields. At the end of the day if your gut instinct rules your heart thats what you have to follow.;) If it works brill, if it doesent well you tried.
    Click to expand...

    My experience in catering and gut instinct are telling me this will work, whats making me be very wary is I had a business around 18 years ago that I got ripped off with when I sold it. I ended up making an IVA, nightmare, it took me around 12 years to re establish my credit, don't ever do one of these as an easy option.
     
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    M

    mpen

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    Jan 11, 2008
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    Preston
  • #34
    Well before I increased my offer I decided to run my plan past a bank so I called Natwest, what a suprise I got.

    Extremley helpful, I first outlined my idea, they asked me quite a few questions about my plan and said they would past it on.

    I got a call around 30 mins later from a different person, (must of been the next one on the chain) who asked me lots of questions about my catering background, I was then asked if I had done a profit and loss projections for the first year, I had so I emailed that across.

    About an hour later I was called by a business manager, she had been through my spreadsheet and found a mistake and asked me to take out the loan projection, I re emailed it and was called back and told they thought the rent I was going to ask for the flat seemed a little low apart from that they didn't see a problem with a 70% loan to value, they emailed the forms for a credit check and application that I filled in and sent back this morning.
     
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    seasonsonline

    seasonsonline

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    Nov 20, 2008
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  • #35
    I've just dropped in on this thread and have no experience with the business of baking, although I did train and work as a baker for a little over a year!- Oh boy, I have a huge amount of respect for bakers because it can be a tough tough job.

    I would just like to say, "Get in there and DO IT". Your gut instinct is good and mine certainly is, so go for it! I personally don't think you've got that much to lose. The very worst that could happen is that you might struggle with keeping a good relationship with the tennants etc, but there's always other people out there. Also, if it quite simply didn't take off then when the economy has a boost (which it will), you can sell up and make a very handsome profit.

    Personally I think it will be great, and if I lived near by I would be straight in there with an offer!!! Whatever you decide to do, "Good luck". I have a good feeling about this one!
     
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