Hidden costs in owning fedex routes

[dssm]

I can show you a half dozen properties where I live that sell for $120-$140k that rent for $800-$1000 a month. Take just one- $140k, $35k down, PITI around $725. And if the owner will carry a small second mtg, your net gain after a long enough period is even better. Sell in ten years, and you would easily more than double your initial investment.

I personally bought a small apt complex with $34k down, poured the positive cash flow back into it, and that $34k was $140k in 4 years, before capital gains taxes. I did put a lot of labor into it- maybe 500 hours over the four years.

You should be posting all this valuable business advise on zillow. No one's asking advise on alternative investments. If not adding value to the discussion why are you wasting so much time with these long posts? Go to zillow instead.

 

[dssm]

Ta

First off these are not even in the realm of like investments. Second If you want all things calculated for expenses on anything possible for FedEx routes you need to add a lot for real estate in terms of property taxes, maintenance, HOA, bad tenants or evictions, and lost rents for move outs.

You can make decent money in the FedEx game, you can lose a lot in the FedEx game, you will have a lot of stress more than likely. When it runs good there are few things better, when it runs bad there are few things worse. I tripled my investment in 3 years with my routes because of leveraged money (little more than doubled from the sale price that I paid to what I sold for, after accounting for debt takeover from new trucks). If you are in the right areas you can make a lot of money but it probably won't be easy and don't run it absentee.

Also I am on the other side of the table in regards to new or old trucks. I had some very piss poor manual tranny internationals that cost me a fortune to keep up on. I was making the most after I brought in 3 brand new 1200s even accounting for over $3k a month for the payments compared to keeping the 1998, 2000, and 2 2001s going

Thank you for the insight, very much appreciated

 

[dmac1]

You are not including major expenses-mortgage interest, property taxes, closing costs and maintenance. You are also assuming a profit at sale which hasnt been the case since pre 2008. I also own property and yield 8% without any interest expense and city level rental return

PITI IS mortgage, taxes, insurance. Maintenance I did mostly myself. Painting cleaning, etc is pretty easy, and so are most minor repairs. Closing costs are minor and one-time. And I don't know where you live, but homes in most metro areas have exceeded their 2008 values. My last home was bought for $97k just a few years ago, great opportunity to buy, and is now worth around $140 with a loan balance of $87k. So my $10 k downpayment is now worth about $40k, even after selling expenses.. Metro areas closer to big cities have done even better.

And are you adding in the amount your tenants are paying toward the loan balance??? Over a 30 yr period, the tenant is paying about $6000 a year in principal- your tenant is buying a house for you. You need to add that to the return on investment.

 

[dmac1]

Ta

Thank you for the insight, very much appreciated

Again, notice how he mentioned leveraging his investment. That makes all the difference. I pointed out the real estate, which you didn't even realize PITI meant mtg payment, taxes, ins, as a comparison to the cited 7% return possible from a fedex route. With that you are buying a job, with any appreciation balanced somewhat by depreciation. If you can get into it without any cash, or very little, it greatly changes the rate of return.

 

[dmac1]

IN order to clarify, net cash flow from any investment is not the same as rate of return on the amount invested. Just be sure to look at the rate of return and not just cash flow on the amount you pay out of pocket.

 

[It will be fine]

Alcohol and a divorce attorney.
But seriously, if the owner you're buying from drives themselves even occasionally you'll need extra backup drivers that he doesn't have. It wouldn't show up anywhere on the financials so it might be hard to find out how much he drives himself. I know if I were selling I'd tell the buyer I never drive, but when it hits the fan I hop in and cover a route or two.

 

[bacha29]

Ba

Bacha. I wonder how many years have you been in the business, how many routes do you have and where are you geographical. I'm curious because you are very vocal on this site and only have negative things to say. Can I ask why you are still in the business when its that horrible?

I was a 23 year Day1 contractor going back to the early days of Roadway Package System. I operated out of a small terminal in a depressed rural area that was designated for closing twice in it's first 3 years of operation. We went through 3 ownership changes at least that many rebrandings 10 terminal managers each with his own idea of how things should be done. Not to mention having to reorganize as subchapter S or C corporations. And I got out just ahead of the ISP introduction . I had no desire to go through the manpower misery's the contractors remaining are going through. Failed drug tests during certification. Failed random drug tests. DUI's after work or over the weekend. Guys thrown in jail for beating up their old ladies not showing up for work the next day and not calling in. Guy's thrown in jail for missing divorce master or domestic relations hearings. Guy's in accidents with property damage while on duty not reporting it. Wrecks deer strikes and breakdowns out in the middle of nowhere.And worst of all a contract with language that is by design so vague and ambiguous to the point that it's not worth the paper it's written on. And just two weeks ago at age 63 with one hip joint already replaced and the other to be replaced next week a desperate contractor called me up and asked if I could help him out of the mess he was in due to the fact that the terminal paid hourly temps had been eliminated leaving it up to the contractor despite settlement reductions to find his own machines and manpower .

 

[FedGT]

I was a 23 year Day1 contractor going back to the early days of Roadway Package System. I operated out of a small terminal in a depressed rural area that was designated for closing twice in it's first 3 years of operation. We went through 3 ownership changes at least that many rebrandings 10 terminal managers each with his own idea of how things should be done. Not to mention having to reorganize as subchapter S or C corporations. And I got out just ahead of the ISP introduction . I had no desire to go through the manpower misery's the contractors remaining are going through. Failed drug tests during certification. Failed random drug tests. DUI's after work or over the weekend. Guys thrown in jail for beating up their old ladies not showing up for work the next day and not calling in. Guy's thrown in jail for missing divorce master or domestic relations hearings. Guy's in accidents with property damage while on duty not reporting it. Wrecks deer strikes and breakdowns out in the middle of nowhere.And worst of all a contract with language that is by design so vague and ambiguous to the point that it's not worth the paper it's written on. And just two weeks ago at age 63 with one hip joint already replaced and the other to be replaced next week a desperate contractor called me up and asked if I could help him out of the mess he was in due to the fact that the terminal paid hourly temps had been eliminated leaving it up to the contractor despite settlement reductions to find his own machines and manpower .

I still can't believe terminals have temps. We never had any temps from when I started and even only had a terminal spare for maybe the first 6 months and then that was gone too.