Bet on fueling station in 1985 pays off

[Seth Tandett]

I thought this would be a good article for folks to read right now with the uncertainty in the air. Think about what markets this investor has lived through since buying this investment in 1985.

I also like his comment about what others were doing with their money when he bought the property.

https://richmondbizsense.com/2020/04/14/bet-on-fueling-station-in-1985-finally-pays-off/

[Nik Moushon]

The only thing out of this article that was good is the second to last paragraph. It just reaffirms what most here already know. Real Estate is a good way to invest your money. But I would suggest not going by this articles numbers and thinking that this guy made out like a bandit. 

The article says he paid $70k for .6 ac back in '85 and now sold it for $520k. But it doesnt differentiate between the land value and the development cost and the business cost and inflation. There are so many number here that are missing that there is no way to tell how much profit this guy actually made. My guess is that its actually very little. Let me explain: Take the inflation rate of the land for example, that $70k in 1985 is worth $168k today. So that leaves about $350k for improvements. In todays market and building codes/restrictions on gas station my guess is it would've cost him $200-300k just to build it. So that leaves $50-150k profit. Divide by 35 years and thats $1.4k - 4.2k/year in profit. Thats anywhere from 2-6% return. So it ranges from bad to half decent investment when you look at the per year returns. A 2% return is not worth its but a 6% could be.

 But those numbers dont mean this was a bad investment. He ran this as a business for 35 years. I should say a passive business since he leased it out to someone else to run. So he probably didnt make a ton of money on this every month but I'm sure its been paid off now for a while and he made good cash flow for the last 10-15 years at least...maybe he paid it off sooner than that. 

The good thing people should take from this is that you dont need a massive development of condos or apartments or a shopping mall to get a good solid passive income coming in for 35 years. A bare bones gas station like this next to an airport is golden. Very little up front and running costs compared to a full service gas station. Hell, for a passive income stream that I had to do barely any work for I would put that kind of money down today. But I am looking for long term passive income...thats not everyone game.