January 1, 2021

Buying Real Estate or Buying A Small Business?

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Real Estate or Small Business?


That is… Not really a question at all in our snarky beliefs.

Let us tell you why (at least right now) we think it’s so much more interesting to acquire a small profitable business.

But first a disclaimer- We do love Real Estate. We both own a decent amount of it. We use it for passive income, we use it for appreciation, we use it for diversification. Heck, Ryan has spent 20+ years buying it and building businesses in real estate. 

BUT – There is a big BUT. It is not the income generating mechanism people think it is. 

No one is great at predicting highs or lows. Including us.

But let us show you a couple graphs that give us pause from a timing perspective. 

Seems like a high amount for commercial property prices, eh?

Also seems like a decently high premium on the residential side, no? 

But maybe it’s not and maybe we’re wrong. You know what I still like about buying a profitable business instead of a house?

SUPPLY & DEMAND IS YOUR FRIEND IN BUSINESS BUYING

There is a record number of small businesses for sale across the country as more Boomers retire, and more people tire from their long grind of starting a business to scaling it. 

And when there is a record number of supply that means a pressure on price. The truth of it is most people don’t know about how to buy a small business.

They don’t know you can:

  • Use an SBA loan to finance entire purchase
  • Use seller financing to not put a $ down
  • Use value added work to get equity without an cash/loan exchange

Our prediction is in the next 20 years we will think of buying small businesses like we do buying income properties. We are just ahead of the game.

You largely don’t buy pieces of land and develop them yourself as a newcomer, just like people largely probably shouldn’t do a startup from scratch. First you go work in a business, then you buy one, and then you look to develop one from scratch. Maybe?

Or maybe you just keep buying and combining them to create businesses so scaleable private equity firms come knocking. 

The next reason is, you usually buy real estate for cash flow, but honestly, real estate is one of the worst ways to get cash flow.

BIG UP FRONT COST LITTLE MARGIN FOR CASH

JUST MUCH MORE PROFITABLE TO OWN A BUSINESS THAN A HOUSE.

Look at this – the average income property owner makes about $200-400 a month on an income property on average, or less than $5k. $5,000 a year for all the broken pipes, sketchy tenants, lightbulbs out and wear and tear on the house. Is that really worth it?

The businesses we are going to teach you to buy will net you at least $100k a year in profit. That means more than $8,000+ a month to you the owner. That seems worth it to me. Is it easy? No, it takes work. I mean does anyone ever just hand anyone millions? No. But is it simple? Yes. It’s not rocket science. If we can do it, you can too. 

Not to mention you cobble a few together and there is this beautiful thing called efficiency, that happens with more than one business we will dive into in the course. 

It takes a little more work to learn the ropes than just going out grabbing a realtor and looking for places. But it also doesn’t take 25% down and a very teeny tiny margin of profit. 

THAT is the POWER OF PROFITABLE SMALL BUSINESS BUYING.

So think unconventially. 

Register for the course here OR if you are serious about buying a small business, join our Mastermind.

Yours Unconventionally,

Codie Sanchez & Ryan Snow
Co-founders Unconventional Acquisitions

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