A commercial property success - for somebody else

Discussion in 'Commercial Property' started by geoffw, 26th May, 2022.

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  1. geoffw

    geoffw Moderator Staff Member

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    Two years ago, I sold a small commercial property in Wagga - a shop front which remained vacant for much of the time I had it. It was a low cost property in a down market area.

    The person who bought it opened a cafe - specialising in healthy food. I thought that was a risky proposition in such a down market area, but that was their choice. I was selling it on vendor finance, so I was interested in seeing it survive.

    Several months ago, their Facebook page announced that they were closing down. This worried me, so I contacted the old agency.

    They told me that it had been rebranded - as as the complete opposite to its former use - as a completely unhealthy cafe, proudly calling itself the Heart Attack Diner. This had been quite successful, to the point that the person who had bought it from me was onselling it to the operator of the new cafe. Of course, the price would reflect the new higher rent. He would make a good profit on this.

    Well done to them - for having the imagination and tenacity, not only to run a new concept restaurant initially, but when that wasn't successful, to completely rebrand it, and to make a success of it.
     
    geoffw, 26th May, 2022
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  2. larrylarry

    larrylarry Well-Known Member

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    It's great to know that you celebrate someone else's success! F&B industry is one of the toughest industry IMHO. I can never do what these small business owners do. Good on them for providing a service in the community and be rewarded.
     
    larrylarry, 26th May, 2022
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  3. jins13

    jins13 Well-Known Member

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    jins13, 26th May, 2022
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  4. larrylarry

    larrylarry Well-Known Member

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    I think it was publicised on TV. Hmm.. I wouldn't pay for bad service. :)
     
    larrylarry, 26th May, 2022
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  5. geoffw

    geoffw Moderator Staff Member

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    There's one way to stop a Karen - fill her mouth.

    This is from an ad for the Wagga cafe
    Screenshot_2022-05-26-10-10-34-37_a23b203fd3aafc6dcb84e438dda678b6.jpg
     
    geoffw, 26th May, 2022
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  6. datto

    datto Well-Known Member

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    A nice earner for some. A smart economic move by them but is it moral and ethical?

    The question in my mind is does one become wealthy through detriment of others or broke by doing what's morally right?

    I know which path I'll choose lol
     
    datto, 26th May, 2022
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  7. datto

    datto Well-Known Member

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    There's a takeaway like that in Mt Druitt using local workers (when they turn up). The staff didn't need any training.
     
    datto, 26th May, 2022
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  8. geoffw

    geoffw Moderator Staff Member

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    I'm not sure why it's not ethical.

    I didn't have the imagination, know how, or energy to do something with the empty shop.

    I bought badly, and I take my hat off to the person who was able to turn a profit through his own abilities.
     
    geoffw, 26th May, 2022
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  9. Scott No Mates

    Scott No Mates Well-Known Member

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    @geoffw - I recall the saga.

    Now that the vendor is cashed up are you able to relaunch action for the recovery of the debt?
     
    Scott No Mates, 26th May, 2022
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  10. geoffw

    geoffw Moderator Staff Member

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    That was a different saga. That was the sale of my franchise business, also using vendor finance. There were no premises involved. I lost a motza on that one.

    This one was a far smaller transaction, and this time, there wasn't any skullduggery involved.
     
    geoffw, 26th May, 2022
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  11. datto

    datto Well-Known Member

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    By selling greasy burgers that contribute to an unhealthy lifestyle (if they eat like that regularly). I'm just having a joke about it.

    Wait a sec, if you can't give it all then doing nothing was probably the best move. You saved yourself a headache.

    You still came out in front?
     
    datto, 26th May, 2022
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  12. jins13

    jins13 Well-Known Member

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    To each to their own but personally for me if I had a CIP and a business linked to gambling was the tenant or wanted to be the new tenant, I can't support this because it goes against my personal values. Even if it was paying in excess of 15% net return, I would still walk away.
     
    jins13, 26th May, 2022
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  13. HiEquity

    HiEquity Well-Known Member

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    I agree. For me, this is actually the main problem with investing in index funds. It forces you to buy a position in Crown and pokies et al. I’m a relatively free enterprise guy but one of my main reasons for working and accumulating wealth is to help make the world a better place. That won’t happen by profiting from human misery.

    With unhealthy food I’m less concerned as I believe in free choice and people have a right to ruin their own lives. With gambling the effects on families and kids is very hard to justify.

    Addictive substances (tobacco/alcohol) are a grey area because they subvert free will so openly. At the end of the day I don’t want or need to be making money from them…
     
    HiEquity, 26th May, 2022
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  14. jins13

    jins13 Well-Known Member

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    Funny thing is one of my CIP tenant is a wine distributor and his business has gone up by 20 to 30% during COVID. I don't feel as bad with this investment compared to others.

    I guess in a previous life working at Star Casino (now called the Star) and I've seen hardcore gamblers in action and losing everything.
     
    jins13, 26th May, 2022
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  15. bamp

    bamp Well-Known Member

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    How do you feel about oil and gas companies?

    What about the banks like Westpac that were proved to have breached aml policies and therefore financed all sorts of illegal activities overseas?
     
    bamp, 26th May, 2022
    #15
  16. HiEquity

    HiEquity Well-Known Member

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    I drive a car and use products derived from oil and gas every day. To boycott oil and gas companies would be the height of hypocrisy.

    Banks make mistakes, have been penalised (a little) and appear to be trying to ensure it doesn't happen again, presumably so as to avoid an even bigger penalty. A world of difference to companies whose very business is based on exploiting the vulnerable and their families.

    This is the flip side of the argument - don't get me wrong - there aren't all that many companies in the ASX with objectionable business practices, in my view, so investing in something like VAS is still quite defensible.
     
    HiEquity, 26th May, 2022
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  17. Irove

    Irove Well-Known Member

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    I come across this ad and looks like this is the one you were taking about :) This guy is definitely taking inspiration from Breaking Bad. Renos are like Gus' fried chicken franchise...
    44 Ziegler Avenue, Wagga Wagga, NSW 2650 - Shop & Retail Property For Sale - realcommercial
     
    Irove, 3rd Jun, 2022
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  18. geoffw

    geoffw Moderator Staff Member

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    That's the one.

    Asking price $300k more than the price I sold it for.

    There has been a lot of work done to it.

    The original:
    Screenshot_2022-06-03-18-33-14-97_40deb401b9ffe8e1df2f1cc5ba480b12.jpg

    The healthy shop:
    Screenshot_2022-06-03-18-31-12-43_40deb401b9ffe8e1df2f1cc5ba480b12.jpg

    And the one being sold now:
    Screenshot_2022-06-03-18-37-40-43_40deb401b9ffe8e1df2f1cc5ba480b12.jpg
    (A coat of paint over the previous version).


    So three completely different concepts all up.
     
    geoffw, 3rd Jun, 2022
    #18
  19. skater

    skater Well-Known Member

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    And yet, the third version is by far the worst looking.
     
    skater, 4th Jun, 2022
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  20. geoffw

    geoffw Moderator Staff Member

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    I don't disagree.

    But the purpose of a commercial establishment is to ensure customers see it, and spend money. Especially if the food is unashamedly really unhealthy.

    Version 1 was a standard shop front which struggled.

    Version 2 was a vegan food establishment which apparently didn't do too well. It is a very down market area after all.

    Version 3 has been really successful, and has made its owner a lot of money - more than double what he paid for the unimproved shopfront.
     
    geoffw, 4th Jun, 2022
    #20
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