Should Recent Retiree Invest in Commercial Real Estate or Buying a Business?
 |
 |
Question:
I am recently retired from a large company but I am hoping to maintain a
small income stream during my retirement. I am torn between buying a small
business to run and investing in commercial real estate and becoming a
landlord. Can you offer any advice?
Answer:
These are two very viable options; however, each one has completely
different considerations that need to be made. So much depends upon what
you'd really like to do. Commercial real estate is generally less of a risk
than buying a business. However, the returns on your investment reflect
this, with a business generating far better returns if you buy the right
one.
The good news about buying real estate is even if you overpay a bit, as long as you have the financial resources to withstand any market downturn, it will recover. Right now, as you know well, real estate returns are far lower than in the past because the market is so hot. But the building will still be standing in a year. If you buy the wrong business, you'll likely be out of business.
Having said this, I personally prefer the option of buying a business over real estate. I prefer the higher potential returns and, more importantly, I truly enjoy the excitement of the business buying process and then getting into a new venture and building the business. To me, it is far more intellectually challenging than commercial real estate.
Owning commercial real estate is not without its challenges. There are problems that come with being a landlord and you may want to speak to some landlords and property managers to get a clear picture on what they do everyday. On this note, perhaps you can enjoy the best of both worlds and consider buying a property management business or another enterprise that deals in the world of real estate?
I'm sure an investment advisor would tell you to buy real estate or even to diversify and do both. It will all come down to what it is that you want from the investment. Owning a business, though the returns can be attractive and the gratification level great, does take work. In fact, it takes hard work and it is difficult to become successful if you only attack it on a part-time basis. But I'm a business-junkie, and to me the whole concept of business ownership, even with its challenges, is fascinating and I couldn't imagine doing anything else.
Download expert tips, and proven strategies covering the entire buying process. Learn how find and buy the right business and negotiate a great price. Click here.
Download a 200-Point Due Diligence Checklist & Strategy Guide. Learn everything about any business before you buy. Click here
| Get more expert advice in Richard Parker's How To Buy A Good Business At A
Great Price - the most widely used reference
resource and strategy guide for buying a business. "I highly recommend this course to anyone even thinking about buying a business." - Dylan Garland President, BizQuest |
|
|
|
Richard Parker author of: How To Buy A Good Business At A Great Price(TM), the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center. Richard Parker is also the author of BizQuest's Business for Sale Blog |