Starting side business

[gorally]

This is a very general question for all the expert out there. I have saved aside about 100K and want to start something at the side. I have a full time job but would like to get some extra cash. I am in my 40 and children of two. I have think of some e-business but the area is just to board and not sure if thats the only way to go.

Any idea is greatly appreciated.

Ed

[TrevorK]

Why not start a franchised business with that amount of cash lying around?

[gorally]

Why not start a franchised business with that amount of cash lying around?
I do have a full time job and not ready to give up. I am just want to get some extra cash plus somewhere to write off my expense. My fulltime job is 9-5 so I can't do much during the day.

[Canucklehead]

Wife at home? Do a home-based business (ebay comes to mind). Since you've got the dough, you can buy in bulk and get better pricing on your inventory. Compare return on investment in a bank account against the potential profits from your business. Don't forget to incorporate your tax deductions/credits as well.

Can you leverage the knowledge in your FT job towards a PT business?

[charger]

I'd start small. 100k is a lot of money to start a business. It is a good easter egg, so don't bet the farm on the success of your business. Where do you work? what kind of experience do you have? and most importantly, what do you enjoy doing the most at your job or otherwise. Once you answer these questions you can start generating ideas.

Beware of franchises. There are quite a few good ones out there, but there are equally as many that go under more frequently than regular businesses.

Read franchisepundit.com it has some good information.

[gorally]

I am a senior IT person and have been with the company for 8 years. I do not want to put all the 100K in right away, instead, I would like to put the most 50% of it. Then use the other for future growth. I already been to Ebay and did some test of water. I found the fee is too high both ebay and paypal and there are too many similar item on the same ground which drive the price lot lower. I would love to have a e-shop but can't think of an unique product line can give me the edge. I also like to use my FT skill as much as possible. Wife is FT working as well but she doesn't mind to quit her to work for a business.

[TrevorK]

I am a senior IT person and have been with the company for 8 years. I do not want to put all the 100K in right away, instead, I would like to put the most 50% of it. Then use the other for future growth. I already been to Ebay and did some test of water. I found the fee is too high both ebay and paypal and there are too many similar item on the same ground which drive the price lot lower. I would love to have a e-shop but can't think of an unique product line can give me the edge. I also like to use my FT skill as much as possible. Wife is FT working as well but she doesn't mind to quit her to work for a business.

The question is - if you want your wife to quit - are you able to get a business going whereby you can make more money than she did working? That'll definetely be tough to do.


One way to succeed in business is to stick with what you know. Like since you're a computer guy, you're probably into gadgets, etc... I'm sure you could do well with some of the "fad" gadgets - LED Keychain lights, etc... The advantages of this is that you know your target market (Since you're in it) and you're better able to tailor your advertising.

But let's be honest - any e-business is VERY risky, especially if you have an idea that someone else has already.

[sleepwalker]

invest in real estate, buy and rent

[gorally]

My wife will not quit the job right away. She will only consider if the business can cover 70% of her current salary. I am not try to be another Amazon to start my business. My goal is to have a constant strem of revenue which can help us be more flexible when we getting older. Honestly, I am over 40, once I got laidoff, its not easy to find another job in the IT field. I just find this can be my turning point of my career and I want to start it now for a insurance purpose.

I have considered putting the money for investment. The usual return for investing on stocks and funds is about 5-8% annually. I got burn during the tech-bubble and very reluctant to put myself in the water again. I tend to be conservative now in this area. A 10% return will be great, but there isn't security or constant stream of return.

I also done some Ebay for 4 months. The conclusion to that is there are tons of gadget on Ebay. Pleople are looking for brand name stuff and they usually want to get it equal or under the market value. I sold some MP3 players and memory sticks. People are expecting you sell a 1G stick under 40 dollars. After the Ebay and paypal fees, there is about 5% profit. The only way you can make money is selling fake stuff :twisted: but thats not the way for long terms.

100K is not enough to buy half a condo in Toronto. I dobut the rent can cover my mortage. There are some scary story about renting for income which I was one of the victim too.

I guess I am too conservative to try but I just don't want to throw my hard saved money into the drank if I am not comfortable or believe there is going to be a return.

[mcewen]

invest in real estate, buy and rent

This might not be such a bad idea.

I was at a Christmas party last year and met a friend of my wife who is a real estate agent and also dabbles in rental properties himself. He explained you can take a loan out to pay the downpayment on the rental property, when it closes you do whatever is necessary to fit it with separate gas/electric meters for upstairs/downstairs.
Your renters move in within a few weeks of you owning it.

The rent covers the mortgage, taxes AND the loan for the downpayment. The only expense you must pay is any renovations to prep for rental.

If you are able to get enough rental properties you might even want to look into a property management firm to look after them for you.

Bottom line – you own 3, 4, maybe even 5 rental properties (or more). Tenents pay mortgage and all you do is let your homes appreciate. Even if the real estate bubble bursts like some are predicting, they will be back up by the time you want to sell in 15 years or so. Besides, the tenents are still paying the mortgages and in 15 years the homes are paid off. When you sell you can make a bundle!

Best of luck!
M

[BobW]

wow... incredibly naive view about being a landlord...

This plan works as long as:

1) there is never a vacancy
2) repairs are never needed
3) noone uses the property illegally (i.e. grow op)
4) noone damages things
5) everyone pays their rent on time
etc.

There is definitely money to be made as a landlord, but there are a lot of expenses that can kill you if you don't have the backing to withstand them.


This might not be such a bad idea.

I was at a Christmas party last year and met a friend of my wife who is a real estate agent and also dabbles in rental properties himself. He explained you can take a loan out to pay the downpayment on the rental property, when it closes you do whatever is necessary to fit it with separate gas/electric meters for upstairs/downstairs.
Your renters move in within a few weeks of you owning it.

The rent covers the mortgage, taxes AND the loan for the downpayment. The only expense you must pay is any renovations to prep for rental.

If you are able to get enough rental properties you might even want to look into a property management firm to look after them for you.

Bottom line – you own 3, 4, maybe even 5 rental properties (or more). Tenents pay mortgage and all you do is let your homes appreciate. Even if the real estate bubble bursts like some are predicting, they will be back up by the time you want to sell in 15 years or so. Besides, the tenents are still paying the mortgages and in 15 years the homes are paid off. When you sell you can make a bundle!

Best of luck!
M

[mcewen]

Well of course there are risks. And yes, I was simplifying things. If there were no risks then everyone would be doing it!

[TrevorK]

Well of course there are risks. And yes, I was simplifying things. If there were no risks then everyone would be doing it!

Amen.


After going through our Residential Tenancy Act for Alberta last night, cover to cover, I realized that the landlord is at a huge disadvantage.

If rent isn't paid, you have to give the renter 14 days to pay. If they still don't pay you can apply to the court to seize their stuff or to kick them out (But not both). By the time that process is all done, I'd guess you have a month or two without rent.

And if you want to kick the tenant out for physically damaging the property? You can serve a 14 day notice, which they are allowed to object to. Then it goes into some sort of trial - so imagine the guy who's wrecking your place, being able to stay even longer? It's insane.

[sparkplug]

After going through our Residential Tenancy Act for Alberta last night, cover to cover, I realized that the landlord is at a huge disadvantage.

Luckily, most renters aren't that smart and in Alberta you have a damage deposit that generally covers a month of rent. In the worst case, renters can do some damage, but you can minimize it by the type of rental property you own and how well you screen prospective renters. I treat my tenants well and they tend to do the same for my properties.

I also choose to pick up the rent cheques every month so I can check out my properties. Many landlords choose to take a year of postdated cheques and never see the tenant or the property. Most good renters are okay with that because they can also express any concerns to me. If the tenant doesn't like the monthly interaction, they're free to rent from someone else.

It's not risk free, but that's why there's a nice reward at the end and the risk-reward has been paying off well for me.

[TrevorK]

Luckily, most renters aren't that smart and in Alberta you have a damage deposit that generally covers a month of rent. In the worst case, renters can do some damage, but you can minimize it by the type of rental property you own and how well you screen prospective renters. I treat my tenants well and they tend to do the same for my properties.

I also choose to pick up the rent cheques every month so I can check out my properties. Many landlords choose to take a year of postdated cheques and never see the tenant or the property. Most good renters are okay with that because they can also express any concerns to me. If the tenant doesn't like the monthly interaction, they're free to rent from someone else.

It's not risk free, but that's why there's a nice reward at the end and the risk-reward has been paying off well for me.

Yeah - I'm thinking of picking up a 70K 1 bedroom condo in Millwoods to try out this landlord stuff. With a condo, I figure there's not much they can break themselves that'll go over the damage deposit, and it's worth so little that I'll be OK in a worst-case scenario.