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Buying ROUTES/ISP Don't trust Fedex Or Contractors
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<blockquote data-quote="dmac1" data-source="post: 3844615" data-attributes="member: 60252"><p>In all of this, you missed what might be the most important from an investment standpoint-- Fedex can unilaterally cancel the contract at ANY time. Best case scenario if they do cancel, you can file a claim and recover lost PROFIT for the period remaining in the contract. If you paid $100k for the right to service the contract, and have a positive cash flow of $5000 a month, and have one year left and fedex cancels, you MIGHT recover $60,000 after paying for arbitration costs and attorney costs, which are NOT recoverable. And that's best case. You will be left with trucks you need to insure and make payments on until you can somehow unload them, and they will likely be worth less than what you owe, or worth less than what you paid. </p><p></p><p>And out of that $5000 profit you claim, fedex will subtract a couple thousand for depreciation on the vehicles if that $5000 doesn't already account for it. Fedex knows how many miles you drive every day, and will subtract about 9 cents per mile out of your positive cash flow for depreciation. People who think that because they have $5000 left at the end of the month means they have a profit of $5000 are dead wrong. Positive cash flow doesn't account for depreciation or income taxes. Depreciation is the declining value (loss of asset value) of your trucks. So that $5000 you try to claim as profit in arbitration you need to pay for will suddenly be $3000, reducing your MAX award to $36k if you have a valid claim in arbitration. After paying the attorney you will need, and paying the arbitration fees, you might win a net of half of that. But if you win, fedex can offer you your job back, and that means you need to be prepared to do the job, meaning you need to keep all the vehicles while waiting at least 3 months and keep making payments and keep paying insurance. If you have sold the vehicles to save money and your employees are gone, you might win arbitration and still lose everything. </p><p></p><p>The risk of total, or even partial loss of your investment on a literally worthless piece of paper is just stupid. Most people don't have a lifetime of savings that they can put at risk. At the very most, the value of the 'business is the value of the trucks plus the net taxable income of one year. If you are going to spend $100k, instead put the money into a couple of decent rental homes at $250k each with a 20% down payment.Almost anywhere in the country, the rent will pay all the cost, and other people will pay for your home. Where I live, you'd even have a few hundred a month POSITIVE cash flow, and could buy 3 decent rental properties with $100k, or even a small apartment complex, or a 4-plex, or a couple duplexesEven in a high cost area, like the San Francisco bay area, you can buy rental property within less than 100 miles away. Even in a redession, rental income doesn't go down much, even if the property resale value drops. If you had bought 2 $250k homes 5 years ago, with $100k down, you would have property worth $550k now, and owe about $380k debt, plus the income tax savings plus any positive cash flow.. </p><p></p><p>If you buy right with real estate, there is almost no risk of losing your original investment. But with a fedex ISP, there is a good risk of losing everything.</p></blockquote><p></p>
[QUOTE="dmac1, post: 3844615, member: 60252"] In all of this, you missed what might be the most important from an investment standpoint-- Fedex can unilaterally cancel the contract at ANY time. Best case scenario if they do cancel, you can file a claim and recover lost PROFIT for the period remaining in the contract. If you paid $100k for the right to service the contract, and have a positive cash flow of $5000 a month, and have one year left and fedex cancels, you MIGHT recover $60,000 after paying for arbitration costs and attorney costs, which are NOT recoverable. And that's best case. You will be left with trucks you need to insure and make payments on until you can somehow unload them, and they will likely be worth less than what you owe, or worth less than what you paid. And out of that $5000 profit you claim, fedex will subtract a couple thousand for depreciation on the vehicles if that $5000 doesn't already account for it. Fedex knows how many miles you drive every day, and will subtract about 9 cents per mile out of your positive cash flow for depreciation. People who think that because they have $5000 left at the end of the month means they have a profit of $5000 are dead wrong. Positive cash flow doesn't account for depreciation or income taxes. Depreciation is the declining value (loss of asset value) of your trucks. So that $5000 you try to claim as profit in arbitration you need to pay for will suddenly be $3000, reducing your MAX award to $36k if you have a valid claim in arbitration. After paying the attorney you will need, and paying the arbitration fees, you might win a net of half of that. But if you win, fedex can offer you your job back, and that means you need to be prepared to do the job, meaning you need to keep all the vehicles while waiting at least 3 months and keep making payments and keep paying insurance. If you have sold the vehicles to save money and your employees are gone, you might win arbitration and still lose everything. The risk of total, or even partial loss of your investment on a literally worthless piece of paper is just stupid. Most people don't have a lifetime of savings that they can put at risk. At the very most, the value of the 'business is the value of the trucks plus the net taxable income of one year. If you are going to spend $100k, instead put the money into a couple of decent rental homes at $250k each with a 20% down payment.Almost anywhere in the country, the rent will pay all the cost, and other people will pay for your home. Where I live, you'd even have a few hundred a month POSITIVE cash flow, and could buy 3 decent rental properties with $100k, or even a small apartment complex, or a 4-plex, or a couple duplexesEven in a high cost area, like the San Francisco bay area, you can buy rental property within less than 100 miles away. Even in a redession, rental income doesn't go down much, even if the property resale value drops. If you had bought 2 $250k homes 5 years ago, with $100k down, you would have property worth $550k now, and owe about $380k debt, plus the income tax savings plus any positive cash flow.. If you buy right with real estate, there is almost no risk of losing your original investment. But with a fedex ISP, there is a good risk of losing everything. [/QUOTE]
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