STFXG is right. It would be a risky . Your success is entirely dependent on your ability to get employees willing to match a UPS drivers production for a fraction of the compensation. That is not easy to do. I know where there is a 5 route operation that X wants sold. They have simply had it with the guy. It is located in the Mid Atlantic Region.If that is what might interest you then you will have to contact the terminal to see what can be done about it. In the past whenever there was a volume spike X would bring in hourly temps throw them in rental trucks and send them out. That is no longer the case and now requires the contractor to purchase extra vehicles and try to compile a list of extra manpower that can be called out on a moments notice to handle that overflow. Those trucks could be parked for long periods of time and the odds of finding somebody who is looking for casual employment who is physically able and can pass a drug test . extremely low. As for buying under scale then try to acquire enough route to get there, I don't thing you have have enough time. You could probably acquire that 5 route I mentioned but in simple terms pal, it's a headache you don't need.
Investing in a FedEx route basics
- Thread starter 12yearsaslave
- Start date
It will be fine
Well-Known Member
If you're open to anywhere in the US I would be very choosy on what to buy. I would look for a route that is already at scale, covers both Ground and HD service and has an entirely contiguous geographic area. This is what Fedex wants and you'll be protected from any forced purchases or sales. You can probably get a good sized loan and some sellers will finance the rest themselves if needed. You should not buy anything that is under scale. Do not even consider it.
dvalleyjim
Well-Known Member
You should not spend 250,000 to net 100,000/ year with two routes and drivers. ISP's require you to have a least 3 areas but want a minimum of 5. You will be putting yourself in a lot of risk and may not like the stress of this business for the little return. Keep your 350,000 or invest in something else.
dvalleyjim
Well-Known Member
And what IWBF said. This business will be going through pretty monumental changes in the next couple years. Also stay away from rural routes for the most part.
Spot on. Do not take retirement money and spend it on a bunch FXG routes especially when you don't know from one day to the next what's going to happen. Why not just get a decent job if you can then take the $100,000 buy an insurance annuity that will provide monthly payments when you reach retirement age?
Find somewhere you can invest in rental properties. Use your cash to buy with enough down payment on each property to just generate a little positive cash flow. You will have tenants buying real estate for you over time. It's a lot safer than 'investing' in a fedex 'business' that has no real history over time of both generating income AND appreciating. You can hire a property manager- just get a good one that will keep your property well maintained. Then you can sit back, collect rent, get a real job, and between the appreciation over 15-30 years, have the benefit leveraging your cash. Even during the 2006-2009 crash, rents never really decreased.
If you are handy and want to be involved, you can do almost all normal maintenance yourself. You won't be tied to your job as much because of the rental income.
If you were considering driving one route or driving even part-time as an owner of fedex routes, rumors have been around that fedex will not allow owners to be drivers much longer. That will greatly decrease any potential income. Unless you pay minimum wage, which is going up almost everywhere, it is hard to make 10% of gross pay as net profit after paying wages, vehicle expenses, taxes, etc, plus any loan payments if you finance. I paid my drivers decently, got my routes for free, and only made maybe $10- $20 per day per driver, plus had all the headaches to deal with when you have employees.
With $200k, you can control 5 decent rental properties or an apartment building in many areas of the country, and generate cash flow, pay down the debt, plus get the appreciation working for you. If you buy a $150k home with $40k down, with rent around $1000 a month where I live, you would net a couple hundred per month after expenses. In 7 years, you'll owe $100k, and the value would be around $175k based on history. On your $40k investment, you can get back $75k plus the cash flow. Or you refi, lower your payment, and increase your cash flow. For a $200k investment, that means your net value of the properties would be $375k.
If you invest $200k in routes, in 7 years, it will still be worth about the same plus only inflation because fedex isn't going to make it more profitable for you. The vehicles decrease in value, the tax write-offs for those vehicles drops, and you need to plan for replacement. A lot of people don't count depreciation as a real loss, but that depreciation does come off the market value of the 'business' should you need to sell.
Don't just look at what it costs to get into the 'business' but also look at what it might cost to get out.
If you are handy and want to be involved, you can do almost all normal maintenance yourself. You won't be tied to your job as much because of the rental income.
If you were considering driving one route or driving even part-time as an owner of fedex routes, rumors have been around that fedex will not allow owners to be drivers much longer. That will greatly decrease any potential income. Unless you pay minimum wage, which is going up almost everywhere, it is hard to make 10% of gross pay as net profit after paying wages, vehicle expenses, taxes, etc, plus any loan payments if you finance. I paid my drivers decently, got my routes for free, and only made maybe $10- $20 per day per driver, plus had all the headaches to deal with when you have employees.
With $200k, you can control 5 decent rental properties or an apartment building in many areas of the country, and generate cash flow, pay down the debt, plus get the appreciation working for you. If you buy a $150k home with $40k down, with rent around $1000 a month where I live, you would net a couple hundred per month after expenses. In 7 years, you'll owe $100k, and the value would be around $175k based on history. On your $40k investment, you can get back $75k plus the cash flow. Or you refi, lower your payment, and increase your cash flow. For a $200k investment, that means your net value of the properties would be $375k.
If you invest $200k in routes, in 7 years, it will still be worth about the same plus only inflation because fedex isn't going to make it more profitable for you. The vehicles decrease in value, the tax write-offs for those vehicles drops, and you need to plan for replacement. A lot of people don't count depreciation as a real loss, but that depreciation does come off the market value of the 'business' should you need to sell.
Don't just look at what it costs to get into the 'business' but also look at what it might cost to get out.
dvalleyjim
Well-Known Member
That's what I did. Don't need to be rich just need some investment income.
Hi. new to this site and the whole x route business. i'm in dd stage to buy a long haul route which has 5 routes, from west to east coast. asking price is basically gross revenues (7 figures). from what I am reading, many people feel it's not a good time to get into this business and the future doesn't look to bright? Any of the active posters on this thread own the long haul routes?
Oldfart
Well-Known Member
Buy an annuity? Dang, thought you were smarter than that. Na, not really.
Question, you mention number of routes for sale are diminishing. Isn't this contrary to what the majority are saying on this post. If the future for X does not look good and the financials are being cut, wouldn't more routes be up for sale?
STFXG
Well-Known Member
You can only own a certain percentage of the routes in each terminal. Buying 1 or 2 routes means you'd have to find at least 3 more routes to hit ISP scale in most buildings. The number of contractors is shrinking due to everyone that is staying has to grow to scale. Less contractors in each building. Less options to buy more routes. Those who are still below scale are pretty numbered at this point. You're speaking about a different subject. I was talking about the ability to start small and grow to scale.
BTW linehaul is an entire different animal than P&D. Why would you want to buy in to that mess? Especially at 100% gross?
I've been told that line haul has a higher profit margin and also easier to manage as you don't deal with customers/package handling. But am very open to other people's insights as I am trying to decide between the 2
LOL...You've been told. You guys who have no clue about the business and are willing to cash in retirements, get loans and mortgage your houses to buy into an industry that you have no experience in. The term "A fool and his money are soon parted" comes to mind. These routes are not investments. Look for starting a business in which you have experience and passion for. That would be a much better recipe for success.
And remember x changes the rules anytime they want. And the rules are going to change again.
Under IC or CSA,
The irony is that I often told fellow contractors that X does not care if you are efficient, just effective.
Now ISP has changed things. Or has it?.
X wants to eliminate duplication now, only because they pay for these inefficiencies. It's how X was able to cover more area by providing HD and ground in the same area for years.
It is perfect. To much exposure will bring it down though . Including new players like Amazon that have hijacked the same model. X basically flew under the radar for decades.
dvalleyjim
Well-Known Member
If you know over-road-trucking and can repair your own fleet go for it. If you don't and can't you should take your class A and drive your own rig to see what's available. Truckers are in demand but the pay is low if you ask me (for the hours necessary to make money). They will be the first to be replaced by self-driving vehicles. If you love living in a truck and the open road. Get a rig!
