Skeptical of a Private Investor

4 Replies

I was talking to a guy tonight and he said that his investors overseas have money but they want a green card and an easier way to get one (rather than the traditional way of applying and waiting) is to invest in a business. He said that that they love investing in businesses especially the food space because they can make a lot more money than real estate. He proceeded to tell me that if 4 investors invested in a property that they bought for 1.8 million (College Housing) is chump change to what they could do with a Chick Fil A. I threw out numbers and said if you bought the property for 1.8m and each investor (4) put the equal amount for the down payment and you received even 12k (each investor) for three years, and everyone gets their initial money back after 3 years because of the refinance, that’s not better? I am fairly wet behind the ears but I told him if the restaurant business was better than real estate then everyone would be trying to do it as opposed to real estate. Let me know your thoughts. I’m speaking over all in general that real estate is better. Any opinion is appreciated.

The profitability of the business depends on a great many things, including the operator and location. The restaurant business in general is brutal and most don't turn a profit and go out of business. Real estate still depends on your operator, but is more stable. You should tell your friend to watch a few episodes of kitchen nightmares :D

-Christopher

@Christopher Brainard I figured. I was just thinking out loud. Granted it depends location but even the best locations aren’t churning out real estate numbers over a 30yr or 20 yr period. There are anomalies but ehhhhhh lol

You can’t compare a “restaurant” with Chick Fil A.  2 different animals.  It’s like buying a stock or a bond.  Franchise fast food places are much more of a guaranteed return than a 1 off restaurant.  That 1 off restaurant has the chance of being wildly profitable, break even or out of business in a few years.  A single franchise restaurant won’t make you rich but is a safer return.  I’d rather have a national franchise triple net tenant in place on a 20 year lease.

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