Investment logic gone askew …

Whilst I was traveling, I hope that you had a little time to reflect on some of the advice that I’ve been dishing out over the last few years?

It’s important that you don’t just follow my (or anybody’s) advice blindly, else you may end up making some fatal logic errors like this poor bloke:

Suppose I have 100K in an index fund that has a ten year return of 7.4%, a five year return of 8.2%, a 3 year return of 17.5%, and a 1 year return of 24.76%.  That is a pretty dependable return over the last few years, but it will probably not keep up with the 24.76% return, but will probably maintain at least a 7% return over the next year.  So I assume that 7% return.

I want to buy a car for 100K.  I can take money out of the index fund to buy the car, and give up $7000 over the next year.  I can borrow money at 2% and pay $2000 in interest over the next year.  If I choose to pay cash, I lose $7K, but if I borrow and leave my own $100K in the mutual fund, I pay $2K and earn $7K, for a net gain of $5K.

So my logic says that paying cash for anything when the investment return is higher than the interest rate is a mistake.  Suze Orman won’t give me advice on this, so if my logic is off, I hope someone will show me better logic.

Have you spotted the flaws?

Well …

The principle of taking a 2% loan on the car so that he can invest at 7% elsewhere is sound, BUT his assumptions are wrong:

1. A low-interest car loan is generally subsidized by price.

Check the true rate, if it’s more than 2% then he is probably better off negotiating the cash price lower THEN doing his cash v finance analysis.

Screen Shot 2013-09-10 at 11.08.38 PM

[Source: http://www.bankrate.com/]

2. Unless he’s planning on a 7+ year auto loan, the correct comparison is the finance rate on the loan against a CD for the same term.

This is because the stock market is way too volatile and he needs an investing horizon of at least 7 – 10 years before returns even approach ‘normal’.

Screen Shot 2013-09-10 at 11.00.27 PM

In fact, even though this chart doesn’t show that time period, he needs at least 30 years (based on nearly 100 years of data) to ‘guarantee’ at least an 8% return (the worst thirty-year period delivered an average annual rate of 8.5% between 1929 and 1958).

3. Your past returns are NO predictor of future performance:

His ~25% of last year could just as easily be a LOSS of 48% next year. Look what happened in 2008:

crash_of_2008

But, he redeems himself, somewhat:

The same logic applies to my mortgage: I pay 2.62% on my house.  I could pay it off, but taking the money out of an international fund with a one year return of 22.85% would result in a net loss of $100k over the next year (moving $500K from an investment at 22.85% to pay off a $500K balance at 2.62%).

4. On the other hand, his mortgage comparison is ideal:

If you can lock in a 3o year mortgage, fixed at today’s ridiculously low rates, and lock that money into a low-cost index fund for the same period then, yes, you are almost assured of a 3%+ net return, compounded for 30 years (which means that he should almost return 1.5 x his initial investment PLUS whatever profit he makes on your property).

That’s why real-estate is such a great long-term investment, and why the stock market is a terrible short-term gamble.

What advice would you give?

 

A 10 minute primer on how to get rich?

primerOn Quora, somebody asked for “something I can learn in 10 minutes that will make me rich?”

The obvious answer is: “not much”.

But …

… this is my blog, and I’m up for a challenge.

In fact, I think you can learn pretty much everything that you need to learn about getting rich in just 10 minutes.

Unfortunately for me, if I’m right, you’ll know everything you need to know in just this one post, so you’ll have no need to keep reading …

… and, if I’m wrong then you’ll simply delete your bookmark to this blog, as it will prove I can no longer deliver.

It appears that I lose either way 😉

Even if this puts this blog out of business, I’m willing to take the 10 Minute Challenge because it also puts every other best-selling ‘get rich’ spruiker – and, let’s face it, most of them are crooks – out of business, as well.

And, that’s worth the sacrifice …

So, here goes:

I think the number one thing that you can learn in 10 minutes is: “what is your Number?” … in other words, how much is ‘rich’ for you?

For example, think about how much annual income you would need (start with $250k p.a. and work your way upwards) and multiply that number by 20.

[AJC: the question was about “rich”, so the answer needs to be $5m to $10m++ … but, this exercise is still valid even if your Number is based on 20 times $50k or $100k]

Once you have that Number in your head, think about how long you are prepared to wait before becoming ‘rich’ (if you are prepared to wait more than 5 to 10 years, surely you can give this exercise longer than 10 minutes)?

Once you have those two numbers, a few minutes playing with this Compound Annual Growth Rate calculator will tell you what % return you need on your investments each year, over that time frame.

Finally, 30 seconds with this chart will tell you everything that you need to know about how you can get rich, which was your original question:

[Source: Seven Years to Seven Figures: The Fast-Track Plan to Becoming a Millionaire (Agora Series): Michael Masterson: 9780471786757: Amazon.com: Books]

Now, as promised, this really is everything you need to know in order to become rich …

… but, I’m not worried about losing readers, because – now that you know what to do – you’ll want to bookmark this page so that you can keep reading to learn how to do it 😉

The Magic Number for successful sales …

Magic Number For Sales

The Magic Number for small-business sales success is 5 …

… this means, that you shouldn’t give up too easily when trying to contact new prospects.

Don’t give up after just 2 attempts at contacting them, your prospect may just be busy, not quite ready to buy, or may really not want to talk to you.

The trouble is, you won’t really know which of these reasons it is – or, whether you really should give up on them – until you have tried to contact them 5 times!

That’s 5 e-mails; 5 voicemails; 5 calls to their cell-phone; 5 handwritten letters; 5 rocking up on the doorstep with coffee and donuts; or …

… better yet, some combination of the above (probably, in the order that I’ve presented).

What is a business plan?

Business-PlansThe other day, somebody asked me:

What is a business plan?

I think they were asking more than the obvious …

… I think they were really asking: “what makes a good business plan? what are the things I should include/ leave out?”

In any event, my answer was – and remains:

“A business plan is …”

A waste of time.

*Keep reading and I’ll tell you the only three times when you must write a business plan*

A very well-known guru once said of planning:

Four things can happen when you plan:

1. You plan and things turn out in your favor

2. You plan and things do not turn out in your favor

3. You do not plan plan and things turn out in your favor, anyway

4. You do not plan and things do not turn out in your favor

Of these, only 1. and 4. are as you expect …

… the rub is that the guru said that all 4 outcomes are equally likely.

In other words, there is no direct link with planning and outcome.

Mike Michalowicz, author of The Pumpkin Plan: A Simple Strategy to Grow A Remarkable Business In Any Field, agrees:

Financial projections for a new company are ludicrous. If we could project financials accurately for a public company for even one day, we’d be billionaires. How can we think we can project reliable financials for a company that doesn’t even exist?

Having worked (actually funded) close to 30 startup businesses to date, I wholeheartedly agree!

In fact …

I have never written a business plan for any of my businesses.

But, I have used financial projections and written executive summaries for three specific purposes:

1. To impress people

I have used a short, one page ‘executive summary’ (like this one) to impress other people i.e. as a ‘sales tool’ for clients, bankers, and investors.

But, make no mistake, these are largely works of faction (fiction dressed as fact) i.e. to be used purely as marketing documents: proposals, marketing and sales presentations, and the like. Do not mistake them with documents actually intended to convince yourself of your business’ future success. For that purpose, I use the following two types of plans …

[AJC: The executive summary that I have shared with you has a place close to my heart: it was my first attempt at a purely online business as a founder/investor. We built the site, but never launched it. It was wonderful, overly ambitiously wonderful … the web equivalent of Howard Hughes’ Spruce Goose]

2. To check if my business is an opportunity worth pursuing

This type looks like the financial part of a business plan, but it’s not a plan, it’s actually a sanity-check:

I did this kind of financial plan (the kind that Mike says is “ludicrous” … and, I would usually agree) only once and you should do the same:

In 1998, I found my Life’s Purpose, and it sucked …

… for me, it meant lots of traveling and time not earning an income (basically, it meant very early retirement). It sucked because now that I knew what I really wanted to do with my Life, I could no longer just sit around and wait for it – and, my business – to ‘just happen’.

So, to passively fund the true cost of my new-found life (an expensive one!), I knew that I simply had to come up with $5 million dollars in just 5 years!

[AJC: for new readers, this is how I came up with the title of this blog, because I actually ended up making $7 million, but it took 7 years]

Now, there was just one small problem: in 1998, I was over $30,000 in debt!

So, I quickly realized that the only hope that I had of going from negative $30,000 to positive $5 million in 5 years was if I could make my business worth that much, quickly.

Working backwards, I asked around (i.e. my accountant and my friends who had their own businesses) to see what my business would need to ‘look like’ in order to be worth $5m to somebody else? The general consensus was that, as a private company if sold to a private seller, it would be worth around three to five times it’s annual taxable profit.

That means my business would need to generate $1m to $1.5 million in profit each year within 5 years …

… with only one small problem: it was currently losing money!

So, in comes the ‘business plan’:

All I wanted to know was: “was it even possible for my business to generate $1m to $1.5 million in profit each year?”

So I drew out a basic business plan (actually, financial forecast) with outrageously large sales growth (and, commensurate growth in expenses) to see: “at what annual sales volume (less reasonable expenses) will it be possible for my business to generate $1m to $1.5 million in profit each year?”

Once I found that revenue (i.e. sales or turnover) number, it was then relatively easy – again, with the help of a spreadsheet – to work out exactly how many customers that I would need, based on some guesses around the size and frequency of their average purchases and so on …

[AJC: now, I’m not even good with numbers and spreadsheets, but I didn’t even need my accountant to help me do any of this; but, if you need the help of yours, go ahead … it’s what they are there for!]

So, with the help of this ‘business plan’ (actually, the ‘financial forecast’ part of the business plan … but, it’s much the same thing), the question became a fairly simple one: ” can I find enough customers to make my business generate $1m to $1.5 million in profit each year?”

Sadly, the answer was: No.

My business would have needed each and every one of the Top 1,000 Corporations in Australia as my clients; given that I currently had 5, that was going to be a stretch [read: impossible] 🙁

So this form of business planning was for one reason and one reason only: to tell me if my business was an opportunity worth pursuing.

The answer, of course, was no … at least, not in it’s current form.

But, it pointed me to the right answer: which was to find markets that were much larger than Australia and relocate. Which we did … to Chicago … and, the rest is history.

[AJC: as it happens, I also had a financial epiphany, and realized that I should be investing – rather than spending – my businesses increasing profits, so a lot went back into the business, so that I could grow without needing to borrow or raise outside capital, but all of the remainder went into passive investments: stocks and real-estate. And, it’s these investments that took me to my first $7m in 7 years. Eventually selling my businesses was a huge dollop of cream on top!]

3. To check if the business can break-even

I do one other kind of business plan (again, I’m now just focussing on the financial forecast section … I never write the other 30 pages typical of most business plans): it’s the one that looks like a typical business forecast spreadsheet [you can download a copy of this example, here]:

break-even

This one has a yearly projection of expected revenue growth, offset by expenses.

But, there’s only one thing that I’m looking for …

… it’s the column, where the bottom-line turns from red to black (actually, from negative to positive … from a loss to a profit)!

In fact, I’ll then fiddle with the numbers in that column to get the ‘bottom line’ number as close to $0.00 as possible (without being pedantic), because what I’m really trying to get a feel for is …

the point where the business breaks-even.

[AJC: in this example, the 2008 column is closest to zero profit (showing a $107,000 loss), and just a few tweaks to the revenue and expenses quickly go that closer to $0.00, or break-even]

I do not care what Date the column says, that isn’t the point.

I do care what the numbers in that column look like:

– Does the sales number look achievable (i.e. for my business, is it more like 6 or 7 mid-size corporate customers than 1,000)?

– How many staff will I need? How big an office? Am I now going to bump into better funded competitors and have to try and steal all their customers, or is the market big enough for all of us?

– Will I need to expand interstate/internationally, franchise, and/or joint venture?

In other words, is it a business that I can comfortably take to break-even (before I run out of money)?

Why?

Well, once I know the business can break-even I know that I can then ride whatever storms come my way and take as long as I need to take to get my business to where it needs to be.

[HINT: see 2., above. Remember: even though I set my goal at $5m in 5 years, I actually took 7 years to make $5m plus a ‘bonus’ $2m]

So, don’t bother with a business plan, unless it’s for one of the three reasons that I outlined, above.

Now, tell me about your business plan successes and failures, so that mine don’t seem so lonely … 🙂

I’m looking for the next $20 idea!

million-dollar-ideaThis is a general call to the wider blogging (and reader of blogs) community:

[Hey, that’s you!]

I’m looking for the next $20 idea!

“Wait!”, you say, “Surely you mean that you’re looking for the next $1,000,000 idea?!”.

But, no (I say, barely managing to stifle a yawn), million dollar ideas are dime a dozen

… why, I have one almost every single day!

[And, I bet you do, too]

No, what I’m really looking for is the next $20 idea …

submitted by a team with $1,000,000 worth of execution.

Derek Sivers said it best:

It’s so funny when I hear people being so protective of ideas. (People who want me to sign an NDA to tell me the simplest idea.)

To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.

That’s why I don’t want to hear people’s ideas.

I’m not interested until I see their execution.

idea-execution

Derek Sivers’ chart shows that even the best idea is only worth $20 (whilst the worst ones – which means most ideas – will actually lose you money).

On the other hand, great teams can make even a mediocre idea fly, and take a great idea from zero to IPO in just a few, short years.

So, this chart’s just an example, to illustrate an idea, right?

No.

According to David S Rose (a third generation serial entrepreneur/investor who has personally invested in over 80 businesses), it’s actually a remarkably accurate tool for assessing the current value of the new Internet and traditional businesses springing up all over the place …

Let’s take a couple of examples:

The Big Internet Idea

Let’s start by looking at almost any of the ‘amazing ideas’ bought by large corporates from their founders in the last few years, e.g: Yahoo has a pretty miserable track record when it comes to startup acquisitions, including Flickr, Delicious, and MyBlogLog and Google has also made a series of startup acquisitions that went nowhere.

Could it be that Google and Yahoo selected badly? Or, is it simply that a corporate cannot execute on these $20 ideas as well as their $1,000,000 founding teams?

The clue is in Google’s failed acquisition of Dodgeball … the founder left and started his next business: the hugely successful Foursquare.

So, in this case, Dennis Crowley (founder of both Dodgeball and Foursquare) came up with the $20 ideas but, in Google’s hands, execution of his first idea was worthless ($1), whilst his own execution of his second idea was clearly worth millions.

The Lifestyle Business

But, what happens if you take a pretty weak idea and give it to a good aspiring-entrepreneur?

Then you have Josh, who started a web-site drop-shipping high end camera gear from China to photographers all over the world, straight out of college.

That was a year ago, and now Josh has a great little business.

The idea may not be very good (after all, anybody can set up an online eCommerce store in about 5 minutes these days, and drop-ship stuff from the USA and China), but he has executed on his ideas when so many others simply don’t put the time and effort in, so they fail before they even begin …

…. so his $1 idea x his $100,000 execution really has given him a great ‘lifestyle’ business … earning him over $100k p.a. in just over a year.

Not bad for somebody so young; not bad for anybody who doesn’t have their eyes set on reaching the stars.

Not so, Ruslan Kogan …

Ruslan, a young Australian, was exactly like Josh, just a few years ago:

Kogan started drop-shipping TV’s and other electronic gear from China to Australia. But, what elevated his idea from an easily replicable $1 idea to a $15 ‘great idea’ was branding everything with his own name: Kogan.

But, what turned his $15 ‘great idea’ into the multi-million dollar business that it is today is amazing execution ($10,000,000): http://www.dreambuildinspirelead.com/3-lessons-from-entrepreneur-ruslan-kogan/

Yes, Ruslan’s business, today, is easily worth $150,000,000 ($15 idea x $10,000,000 execution).

See, this unique valuation tool really does work!

So, don’t be the last person in the world to realize that even the world’s most amazing ideas only $20: it’s million dollar execution that counts … if you want a $20 million business?

But, don’t come to me to fund you until you can prove it 😉

 

Sudden Money. Sudden Death.

Winning the lottery may not kill you, but 70% of the time, it spells financial suicide:

It is estimated that up to 70% of all people who suddenly receive large amounts of money will lose that money within a few years.

It doesn’t take a genius to realize that the twin culprits are:

1. Gaining a large sum of money too quickly; this can be from an inheritance, winning the lottery, selling a business, and so on.

2. Impulse spending; the more you have, it seems, the bigger the amounts that you are prepared to spend on impulse.

The problem is, if you gain your money too quickly, you don’t give yourself time on the way up, to learn the lessons of money management that need to be learned in order not to fall back down.

And, when it comes to money, the bigger they are (as in, the bigger the windfall gain), the harder they fall:

lottery

So, here’s my golden advice on dealing with ‘sudden money’ that will help you avoid going broke again …

… as soon as you get that windfall, start using this table to effectively control that spending impulse:

If you hit the jackpot and made more than a couple of million, then you just start adding zero’s to the dollar amounts in this table, to suit!

But, the ‘default table’, as presented above, is a pretty good place to start …

… and, there’s no reason why you need to wait for the windfall before you start using it 😉

 

Help a reader: the results are in!

Readrer Poll

Thanks to all of you who voted, especially those who backed up their vote with an opinion (via the comments section of my post)!

Jason asked whether he should continue renting the commercial condo that his business is in for $1,800 per month OR buy it for $160,000? When he asked his friends earlier he didn’t get much help:

I have asked a lot of people and get about half giving me one suggestion while half give me the opposite!

Unfortunately, as is often the case with these difficult decisions, our vote is split 3:2 …  but, in favor of buying the building.

For example, Zach is emphatically FOR buying the building:

More information would be helpful, but that seems like a good price for $1,800/mo rent. Business or no business, I would take that deal every time.

Whilst, Victor is equally AGAINST:

Don’t invest in something you don’t know much about, you know your business, invest in that, pass on what you don’t know.

So, Jason is right back where he started 🙁

My general advice in these situations, without having nearly enough enough info to give specific/personal advice, is to …

do both. Every single time.

You see, it comes from the advice that my Grandpa once gave me: I remember him recounting an argument that he had with Grandma when they were just starting out. Grandma wanted to buy a modest home, instead of renting what amounted to little more than dumps, being all they could afford as poor immigrants, but my grandfather had other ideas; he said:

From a business, you will always be able to buy a house. But, from a house you will never buy a business.

Sound advice (it certainly guided me), but how does it help in this situation?

Well, it applies in reverse: when you have a business that’s generating cashflow, you have to start thinking about external investments, and buying your own premises is often the best place to start. Of course, you still have to keep the reinvestment needs of the business in mind … after all, that’s what’s generating the cash!

But, what happens when it seems you don’t have enough capital to do both?

That was the situation that I found myself in when we outgrew our last rental office:

I found a building that we could rehab for our purposes, but that I felt had good future capital appreciation value: in other words, a building that I thought – first and foremost – would be a good investment.

It was way over budget (e.g. when comparing old rent v new mortgage), but it seemed too good an investment opportunity to simply pass up.

I had no idea how to value it properly, and it was going for auction, but I found out that the only other serious bidder was a property developer. I knew that he would only pay land value, not much more.

This was a trick that I had employed successfully once before: find a property that developers are interested in, but that you want to own/occupy and pay $1 more than they are willing to bid.

And, that’s roughly what happened (cost me $1k over his losing bid of $1.36m) …

Then the worry started: how was I going to pay for this monolith? How was I going to find the deposit?

I dealt with the second issue (finding the deposit) by employing a tried-and-tested short-term funding method: shorten the time to receive payments from clients and lengthen the time to pay suppliers.

This (temporarily) reduces the amount of working capital tied up in the business at the (hopefully, manageable & short-term) expense of happy customers and suppliers.

I dealt with the first problem (plus, the new problem of quickly replenishing the working capital situation) by not eating for 6 months 😉

This means, maximizing the profits of the business to help cover mortgage costs and rehab costs, whilst quickly rebuilding the working capital of the business.

Tough – very tough for a while – but, manageable.

And, that’s how I made my first real $1 million: I sold the building just a few years later for nearly $2.5m. It remains one of the best real-estate investments that I have ever made.

The only catch, if Jason were to employ this strategy, is that his building doesn’t look like it has much upside potential – with “32 units, of whitch 24 are currently vacant shells” in the complex.

Perhaps, Jason is better off using the month-by-month lease time, when his lease expires, to give him time to find something with a little more upside potential?

 

 

Make more money with the watermelon plan …

20130522-123549.jpgIf you want to make money, you need a plan …

… a simple plan.

And, nothing could be simpler – or make more sense – than The Watermelon Plan.

Simple?

It has to be; you see, this ‘plan’ was created by an 8 year old!

Here’s the plan, as told by the boy’s uncle, Jack:

I will never forget my little 9 year old cousin who lives in the UK, who shared a pretty simple money making plan with me. He told me he is planning on:

1. Buying a watermelon for $5
2. Cutting it up into 10 pieces and selling each piece for a dollar.
3. Go back to the store and buy 2 watermelons.
4. Etc.

I love this simple and basic business-building thought process.

There’s nothing difficult about making money if 8 year olds can do it.

And, they can. Here’s proof … a little closer to home … It’s my son’s story, as told on Quora:

At 10, my son wanted to start a cake shop outside his grandmother’s house (naturally, she would bake, he would sell).

But, at 12 y.o. he came to me and asked for $50 to start his new business on eBay. He offered me 49%. I accepted, just to see what would happen.

And, something did happen: a week later a package from China arrived at our front door, and over the next week a few smaller packages left the same way.

Two weeks later, my son came to me and said “here’s your $50 back” … he bought me back out!

[I didn’t have the heart to tell him that it doesn’t work like that. That’s probably the only non-commercial assistance that I’ve given his business in the last 6 years].

Since then, after growing his eBay store for 3 or 4 years, my son ‘graduated’ to an online service-based business that nets him in excess of $60k p.a. (turning over $100k++ p.a.) and has bought him a car whilst still in high school.

He contracts programmers in India and has 2 full-time customer service contractors in Manila. One of them just sent him a Christmas present and a card thanking him, saying that – because of my son – he can now fulfil his life ambition of opening up his own coffee shop.

Not only is my son setting up his own life, he’s changing other people’s lives already … and, he’s just finished high school.

With luck, you – or your children – may be able to embark on a similar journey.

A quick real-estate buck!

RE - 1Beware those who love stocks. Beware those who love bonds. Beware those who love gold, oil, futures, and so on.

Most of all, beware those who love real-estate!

OK, so I invest in real-estate …

… but, I’m not in love with it.

Take a look at the above infographic [click to enlarge]; a picture (with numbers) tells a thousand words:

This person claims that they (or a client) bought a single-family home for only $35,000 and now clear (fees, insurance, and property taxes) $680 a month in rent.

Since they put in $7k in closing costs and rehab when they bought it, they are really returning $8k a year, which is 19% a year.

The key to real-estate is that you can add value.

To see what I mean, check out the highlighted items in the enlargement, below:

RE - 2

By spending just $5k in rehab, the purchaser immediately increased the value of the property by $18k, from $42k to $60k. Presumably, this similarly increased the rents.

The problem with this type of example is that it is unrealistic: this example assumes that you paid cash for the property.

Instead, I’ve made a ‘more normal’ example from this one, to show you how cash-on-cash returns really work, and why RE really is such a good investment:

RE - 3

[you can download the full spreadsheet here:  https://www.dropbox.com/s/ujuqaptgrr8hssv/Simple%20RE%20Analyzer.xls]

This analysis confirms that it is possible to get a 19% Cash-on-Cash Return, but:

1. You need to have a 15 year outlook; the first year produces a loss,

2. The assumed rent is VERY high.

The reality is that most residential real-estate tends to produce negative returns in the early years, and capital gains over the longer term. Whereas commercial real-estate tends to produce higher earlier returns but lower capital growth.

Still, by purchasing well, adding value (e.g. through a clever & economic rehab) it is possible to produce fairly reliable (when compared to the up’s and down’s of the stock market) cash-on-cash returns that blow away most other consumer-grade investments.

Help a reader out …

Should this reader buy his building or reinvest in his business?

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What should this reader do?

Read his story, make a selection, and leave a comment:

We are renting the commercial condo that our business is in for $1,800 per month, we can buy it for $160,000 should we?

We like the building, the location is a bit hard to find, and with a 20% down it will really cut down on the monthly expense but I will eat up $32,000 that we could use to expand the business. I don’t have $32k but I have a friend who offered to lend me half of it, I do have half.

We currently average $15k a month in sales, other than rent we have about $1000 in fixed expenses, I pay myself $2500, and we average about 25% for costs of goods sold. We currently have staff that costs about $2000 per month. This gives us about $4,000 of extra money at the end of each month….so far with this extra money we have bought lots of extra inventory to the point that we have enough, we have bought a commercial truck, the business is 100% debt free and has about $5,000 in liquid assets saved up (And we personally have over $10k), along with 30k in inventory and 10k in tools and equipment. Personally we are debt free other than the house, student loans and car….but with the house at 2% interest and the car at 2.9% and the student loans at 3.25% I don’t see any reason to send any of them more then the minimum because we make 4 times on most inventory that we buy.

So is now a good time to get the building? Or should we keep our cash free to keep buying things that are our core business? We are not in the business of real estate so should we own or rent?

Now, I’m not yet sure exactly what advice to give him, yet, so leave a comment and help us BOTH out 🙂