Saturday, 12 July 2014

I want to own a retail space

My next plan is to buy a retail space. If I have a good idea, I can operate my own business on my own retail property. This is great, because I don't like the feeling that a huge part of my business revenue would have to be used to pay the landlord first. If I don't have a business idea (or my business is not doing well), I can rent the space out and collect rental. I think this sounds like a relatively safe plan.

What I'm thinking at this point in time is a small retail space that is not more than 150 square feet, and suitable for a small F&B take-away business. I figured that the F&B sector has lower barriers to entry, and potentially a large pool of tenants to rent out to (e.g. existing F&B chains which are expanding, or start-ups which are looking for a small space to try out their business ideas). From online searches, it appears that I should be able to find a suitable one at around $700k. Assuming that I can obtain a loan at 80% of the purchase price, I will need to have about $155k of cash for the downpayment, taxes, lawyer fees etc. 

I'm just an average salaried worker. $155k is a huge sum. Therefore, I must work out a saving plan and consistently stick to the plan in order to achieve this. I did a rough calculation, and it will take me at least 4 years (included my estimates of potential year-end bonuses and assuming that my apartment is continuously being rented out).

What if in 4 years' time, the rules and regulations changed and I can't take a 80% loan for a commercial property? With inflation over the years, what if a budget of $700k can't get me a space that is located in the suburbs and has human traffic that is still sufficiently okay? I'm anxious about all these "what ifs" that would frustrate my plan to own a commercial property.

I guess the only thing that I have control of is my plan to save up for the initial downpayment. So, I shall tell myself to stop worrying what may or may not happen in the future. I have a plan, so I just stick to it, save up every month, and consistently work towards my goal from now onwards.

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