One Florida McDonald’s offers $50 to anyone who interviews for a job

Messages
56
Location
Midwest
Downtown Chicago McDoanld's start off at around $15. Having worked fast food when I was younger, it takes more skills than people realize. I know it's not "rocket science" but dealing with angry customers at the drive through is not always easy. Learning how to get orders ready and deal with angry customers helped me when I eventually moved on to restaurants and "fine dining" as a server.
 
Messages
17,418
Location
Silicon Valley
Is it worth having a rental verses putting that money in the stock market ?
People have different comfort level and expertise. My parents know nothing about stocks but have a lot of "common sense" about homes and repair, and are great handyman (they were former machinists and real estate agents in another country). I on the other hand can do simple repair and knows more about tech stocks. I may not do as well in rental as my parents and my parents may not do as well in tech stock as I do. We all need to find out what works for each of us.

Then we have people who just want to tell the tenants to do all the work calling repairman and appliance shopping whenever things break. Those people are happy to be "cash flow positive" but will likely not make as much as they could, and get ripped off by people, or having tenants neglect problems until it is too big and too expensive to repair.
 
Messages
2,865
Location
utah
Is it worth having a rental verses putting that money in the stock market ?
Having done both, and now i am all stocks, rentals are NOT worth it right now. The Cap rates are in the toilet. Speaking of the toilet, your tenant just called and you have to go fix it. Stocks are riskier but if you can sit on the money indefinitely you can ride out the dips.

People generally treat anything rented poorly. Stocks are also so much more liquid than a rental property. I can instantly wire funds out or ACH it out in a few days. With the availiability of margin i don't even have to sell to drum up some cash.

Let me know when i can get an 8% cap rate on rentals and i will buy one.
 
Messages
2,865
Location
utah
I don't think people really understand how a franchise works. While the cost of the franchise is about 1-2 million, you only need to come up with about 40% of that to own it, you can finance the rest of it. So that 1-2 million is really 400-800k. While it might not be good to just have one location, most franchises have multiple locations so that 150k profit per local adds up once they have 5-20 stores. Have multiple locations also somewhat insulates you from problem stores. You can one or two bad ones but still do well overall. It's like my landlording, I have 10+ units, and everyone here moans and groans about the terrors of the bad tenant and I've had my share of them, but you only get them once in a while and if you just have one unit, then that's 100% of your problems but spread out amount multiple units, there's actually less risk. Anyway a 150k return on a 400-800k investment is actually better than the stock market. S&P 500 only does about 10-15% on average in a 10 year period. I think with McDonalds, revenue per store is probably more constant regardless of how the economy is doing.
Okay 40% down is still 400-800k dollars per location. AKA a huge amount of money in the stock market. You can control MCD stock with less than 40% down through margin. Not that i would recommend that, but it is possible.

What is the rate on a franchise loan? 5-8% i would guess, similar to brokerage margin rates.

Sounds risky to borrow so much money for what is essentially a brand name. You don't own the physical real estate even. MCD corporate is collecting all those rents and recurring fees and distributing that to stock holders. You could almost think of MCD as a REIT.

I don't own any MCD but it looks like good cashflow with decent option premiums to be had. Anyone can buy it with $233 a share. Only some people can buy a whole mcdonalds franchise.

Most franchises make you demostrate liquidity outside of the cost of buying the franchise, such as 250k liquid net worth not in your primary residence. It all sounds not worth it. People still do it and end up making money i guess.
 
Messages
10,748
Location
MA
Okay 40% down is still 400-800k dollars per location. AKA a huge amount of money in the stock market. You can control MCD stock with less than 40% down through margin. Not that i would recommend that, but it is possible.

What is the rate on a franchise loan? 5-8% i would guess, similar to brokerage margin rates.

Sounds risky to borrow so much money for what is essentially a brand name. You don't own the physical real estate even. MCD corporate is collecting all those rents and recurring fees and distributing that to stock holders. You could almost think of MCD as a REIT.

I don't own any MCD but it looks like good cashflow with decent option premiums to be had. Anyone can buy it with $233 a share. Only some people can buy a whole mcdonalds franchise.

Most franchises make you demostrate liquidity outside of the cost of buying the franchise, such as 250k liquid net worth not in your primary residence. It all sounds not worth it. People still do it and end up making money i guess.
Brokerage margin rates can actually be quite low. Interactive Brokers charge 1.59% and 1.09% when borrowing over 100k. Robinhood is 2.5%. The other big names are in the 5-9% range.

I believe with borrowing the money, they want you to pay it back in 7 years. I think for McDonalds, they want you to have at least 500k but I think they say that most that buy them have a couple million as each franchisee owns a few stores.

I agree cap rates on rentals aren't good right now. But I bought mine a long time ago and I'm probably up about 2x from when I bought it and only put 25% down so more like 8x. Plus yeah, the tenants have paid the mortgage. I consider it a small part time job. It helps with the real estate side of my business. My returns in the stock market hasn't been as good although they've been very good the last couple of years and if you just look at the last 5 years, you could probably say stocks have outperformed real estate in that time period.
 
Messages
24,456
Location
Dallas,Tx USA
Having done both, and now i am all stocks, rentals are NOT worth it right now. The Cap rates are in the toilet. Speaking of the toilet, your tenant just called and you have to go fix it. Stocks are riskier but if you can sit on the money indefinitely you can ride out the dips.

People generally treat anything rented poorly. Stocks are also so much more liquid than a rental property. I can instantly wire funds out or ACH it out in a few days. With the availiability of margin i don't even have to sell to drum up some cash.

Let me know when i can get an 8% cap rate on rentals and i will buy one.
You just have to "filter" and "weed out" your renters.
 
Messages
2,865
Location
utah
You just have to "filter" and "weed out" your renters.
That helps. What if you buy the property and it already has a problem tenant? What if they make you go through a full eviction process and leave all their junk behind? What if you max out a $15,000 credit card with 0% for 18 months to remodel it? Then, after spending tons of money and work, the next tenant puts a bunch of wear on the new floors and scuffs up your new paint. Keep the deposit? it was only like $1000.

Also you can screen/obtain a good tenant that just ends up going bad over time. People hit hard times or get into substance abuse and trash your place.

It's hard money to make but it will make you money.
 
Messages
24,456
Location
Dallas,Tx USA
That helps. What if you buy the property and it already has a problem tenant? What if they make you go through a full eviction process and leave all their junk behind? What if you max out a $15,000 credit card with 0% for 18 months to remodel it? Then, after spending tons of money and work, the next tenant puts a bunch of wear on the new floors and scuffs up your new paint. Keep the deposit? it was only like $1000.

Also you can screen/obtain a good tenant that just ends up going bad over time. People hit hard times or get into substance abuse and trash your place.

It's hard money to make but it will make you money.
Gf's dad only rents to retiree's. He's had the same renters for 20+ years. I manage his properties for him. One is a retired NASA engineer and one of the others is a retired teacher. They both keep their places impeccably clean. Those are the kind of renters you want. He won't accept hud or housing.
 
Messages
18,544
Location
Michigan
No one wants to work difficult, customer-facing jobs for exploitative wages?

😮

It's amazing how quickly "essential worker" and "hero" turned back into "unskilled labor" once the topic of money was brought up.
Not to mention it’s not just umenploved “lazy” folk either. People seem to quickly forget about all those folk who retired early because of “it”, or those stay at home parents who worked those part time jobs when their kids were in school. Now they have to teach “virtual” at home. Or those who simply decided to work from home. There is going to be a labor shortage well beyond September. People actually have more job options now- why work retail/restaurant/fast food?
 
Messages
2,865
Location
utah
Gf's dad only rents to retiree's. He's had the same renters for 20+ years. I manage his properties for him. One is a retired NASA engineer and one of the others is a retired teacher. They both keep their places impeccably clean. Those are the kind of renters you want. He won't accept hud or housing.
Sounds great, only it would be illegal to discriminate based upon age. At least in my area the people renting 2-3 bedrooms are mostly sub 50.

Bad tenant is not extremely likely if your careful but it can/will happen eventually.
 
Messages
24,456
Location
Dallas,Tx USA
Sounds great, only it would be illegal to discriminate based upon age. At least in my area the people renting 2-3 bedrooms are mostly sub 50.

Bad tenant is not extremely likely if your careful but it can/will happen eventually.
You just have to filter all your applicants. If only retiree's meet the "criteria", it's a win-win!!
 
Messages
10,748
Location
MA
That helps. What if you buy the property and it already has a problem tenant? What if they make you go through a full eviction process and leave all their junk behind? What if you max out a $15,000 credit card with 0% for 18 months to remodel it? Then, after spending tons of money and work, the next tenant puts a bunch of wear on the new floors and scuffs up your new paint. Keep the deposit? it was only like $1000.

Also you can screen/obtain a good tenant that just ends up going bad over time. People hit hard times or get into substance abuse and trash your place.

It's hard money to make but it will make you money.
Been there, done that. You normally just buy the place and have it delivered vacant. Of course you go into knowing that you might have to evict the guy and bid accordingly. If you just have 15k on a credit card, that's probably not enough liquidity to get into that type of business. A couple of good metrics that have lead to good tenants is having a high credit score and a decent amount of money in the bank. Those people are never late with the rent. I pretty much demand 3 months worth of deposits in advance and pass on anyone who asks to work out a payment plan. Means they don't have the discipline to save 3 months worth of rent and will eventually be late. I remember one tenant that was a bartender and when I told her it'd be 3k-4k or something like that, she said wow, that's a lot of money, I felt like saying that's nothing lots of people have tons more than that but kept my mouth shut and knew to pass on her. I remember doing a rental to a doctor once, 14k in deposits, no problem.
 
Messages
2,865
Location
utah
Been there, done that. You normally just buy the place and have it delivered vacant. Of course you go into knowing that you might have to evict the guy and bid accordingly. If you just have 15k on a credit card, that's probably not enough liquidity to get into that type of business. A couple of good metrics that have lead to good tenants is having a high credit score and a decent amount of money in the bank. Those people are never late with the rent. I pretty much demand 3 months worth of deposits in advance and pass on anyone who asks to work out a payment plan. Means they don't have the discipline to save 3 months worth of rent and will eventually be late. I remember one tenant that was a bartender and when I told her it'd be 3k-4k or something like that, she said wow, that's a lot of money, I felt like saying that's nothing lots of people have tons more than that but kept my mouth shut and knew to pass on her. I remember doing a rental to a doctor once, 14k in deposits, no problem.
This was my wife and I’s first property purchase and we had to have the rent money to qualify for the loan. It worked out well in the long run, but renting real estate can really suck sometimes.
 
Messages
10,908
Location
Nokesville, VA
. I pretty much demand 3 months worth of deposits in advance and pass on anyone who asks to work out a payment plan.

Nice that your state allows you to do that. Here in Virginia, landlords cannot require a security deposit higher than 2 month's rent.

I wonder how many states actually limit security deposits the way Virginia does. Richmond (capital of Virginia) has always taken a paternalistic attitude towards the citizen-peons.
 
Messages
10,748
Location
MA
Nice that your state allows you to do that. Here in Virginia, landlords cannot require a security deposit higher than 2 month's rent.

I wonder how many states actually limit security deposits the way Virginia does. Richmond (capital of Virginia) has always taken a paternalistic attitude towards the citizen-peons.
Well here it's only one month's security deposit, but you can also ask for the first month's rent and the last month's rent and I get all that at the lease signing so if they're moving in a few weeks, they have to come up with all that in advance, I don't wait til the move in date to collect it because then if they don't have it, you're stuck.
 
Messages
6,774
Location
Los Gatos, CA
Having worked fast food when I was younger, it takes more skills than people realize. I know it's not "rocket science" but dealing with angry customers at the drive through is not always easy.
Well said. I couldn't agree more!
I firmly believe that my "Solutions Architect" title pays far more than any Mickey D's job, and my job is far easier. Far easier.
 
Messages
17,418
Location
Silicon Valley
That helps. What if you buy the property and it already has a problem tenant? What if they make you go through a full eviction process and leave all their junk behind? What if you max out a $15,000 credit card with 0% for 18 months to remodel it? Then, after spending tons of money and work, the next tenant puts a bunch of wear on the new floors and scuffs up your new paint. Keep the deposit? it was only like $1000.

Also you can screen/obtain a good tenant that just ends up going bad over time. People hit hard times or get into substance abuse and trash your place.

It's hard money to make but it will make you money.
Those should be left to professional landlord with enough capital to handle the risk, and be bought with a discount.

For what we have gotten so far, the only combination that works for us is: 1) high credit score (720 cut off for us), 2) high enough income so they won't be living paycheck to paycheck, 3) low enough rent and good upkeep to make it an attractive place that many tenants want to compete for (below market for the quality we provide), so the honest tenants know it is a good deal and if they got evicted they will end up with higher rent elsewhere. Yes you lose some money but it is less headache if they know they will lose out if they get kicked out.

Ethnicity or age really doesn't do well for us, nor job title.
 
Top