Retirement funded by BTL - Reality after 1 year.

[NickCQ]

drainbrain said:

Nick, there is good news and not so good news.

1) Using your assessment you are only a PM away from being able to grab yourself a great bargain. Seriously.

2) Hate to sound like the forum know-alls, but your last para doesn't illustrate much understanding of oobah-boobah and its relationship with the private hire trade.

1) My valuation is based on your cashflow projections as read - do I believe them? Not a chance!
2) The drivers can do what they like but when passengers get into the habit of using Uber, they never go back. Perhaps Addison Lee with an enormous marketing budget, deep-pocketed PE owners, international reach and corporate client base can compete, but your average mom-and-pop minicab firm is dying. Electric and driverless cars will just hasten the demise.

Do a proper valuation of the vehicles, buy it for a 20% discount to that number and liquidate it ASAP.

[WindyCommon]

NickCQ said:

WindyCommon said:

drainbrain said:

So there's about £75k a week flowing in potentially which experience tells me means £65k in reality. VAT's funny in taxis but I'd guess at £120k a quarter or £10k+/- a week. Running costs are +/- £15k a week. And we'd like to pay our potential sleeping partner £6k a week. £312kpa.

We've got a shedload of expert financial strategists and skilled risk assessors on this forum. Or have we? Because I'd like their opinion on what it would be worth investing for a £312kpa completely hands off income plus of course 33% interest in the business itself. So give me those expert opinions, guys.

Sure. Here you go:

Applying Uber's estimated revenue multiple of 15x, the equity is worth approx £51m so £17m for 33%.
The loan structure (viewing the £312k pa as interest at [say]10.4%pa) adds another £3m

So £20m.

Uber's a bad comp, venture capital valuations are crazy. I'd look at this business as a sum-of-the-parts, so:
200 vehicles at whatever, £5-10k; plus
the profit stream from 380 drivers, seems to about £2.5k pa per driver on a net basis

Correct multiple for the driver earnings seems to be about 5-6x based on the Carlye / Addison Lee transaction (2013), so I get £8 mm for the whole business, 12.5% initial cashflow yield (but declining over time as the vehicles depreciate).

I just think it's a dying business - you are fked as soon as any of the big guys (Uber, Lyft etc) come into your area. Plus the regulatory risk if you have to pay drivers minimum wage / they can't be self-employed etc.

I think you're taking this a little too seriously...!

[drainbrain]

richardxjr said:

Is that 300 car taxi business that you sold the same one that you are trying to buy back?

Still not quite sure whether you are here to
a) tell us all how we can retire as BTLers, even though you haven't retired.
b) find some greedy mug punter to buy back your taxi business for you
c) resurrect an online fantasy that was temporarily halted by stupid bankers?

Meanwhile, in a complex alternative reality in a far-off galaxy…..

[DonkeyApple]

drainbrain said:

FredClogs said:

Dude, you're not addressing what people are saying, which is, "you've not retired!"

If I wasn't retired what on earth do you think I'd be doing on here at this time? What do you think I am? Some lowlife who sits talking crap on the internet when I should be working? Or running some dead business with nothing more interesting to do?

Come now.

Edited by drainbrain on Friday 28th October 11:48

It's what you were doing a decade ago when working full time. Sitting on PH trying to justify yourself to Internet ransoms and creating accusations that were never levelled at you by anyone here. It is very clearly a weird insecurity issue where you feel underrated by others when they've never given you any logical reason to be so.

[sidicks]

DonkeyApple said:

You're just proving the point. Your issue with 'financial gurus' is exactly that, your personal issue.

Easy to be intimidated by something you don't understand!

(And invent strawman arguments to try and justify your own approach!)

[Zoon]

drainbrain said:

Zoon said:

So you had 80 less taxis than a business that is making a million a year profit?
How much did you get for it?
I'd wager you'd be making more from the interest of the business sale than you would from BTL. Or should be.

Now THERE's a story!!!! It's a good'un too (don't worry Mr Donkey it's not THAT good). But we need the investor to fill in the bit between what we sold and what we're (maybe) buying, i.e. 80 drivers + 200 cars + a premises + better goodwill.

Your figures don't add up, originally you sold a 300 car business, were looking to buy one with 380 which has now turned into 500? Why do you have only 80 drivers and 200 cars?
Goodwill is intangible so can only be arrived at after both parties agree on a figure, there is no such thing as better goodwill.

Are you saying you ran a 300 car taxi firm from home before?

[NickCQ]

WindyCommon said:

I think you're taking this a little too seriously...!

Maybe , but I never miss an opportunity to practice amateur corporate finance!

[drainbrain]

Guys, I have to go out now, but more later…..

[DonkeyApple]

sidicks said:

DonkeyApple said:

You're just proving the point. Your issue with 'financial gurus' is exactly that, your personal issue.

Easy to be intimidated by something you don't understand!

(And invent strawman arguments to try and justify your own approach!)

I think he's just a smart guy who has a massive insecurity chip in regards to 'financial gurus' to the point that even when they agree with him he still thinks they are disagreeing and talking down to him as a pleb. As I said, it's his personal issue and it always makes discussing anything difficult as any conversation always veers off onto different subjects as he keeps trying to prove he isn't stupid or a failure when no one has ever levied those charges in his direction.

[drainbrain]

sidicks said:

DonkeyApple said:

You're just proving the point. Your issue with 'financial gurus' is exactly that, your personal issue.

Easy to be intimidated by something you don't understand!

(And invent strawman arguments to try and justify your own approach!)

OI!! Get back to work! You're not being paid to sit on the internet talking tripe!

Shoooo!!

[richardxjr]

I used to like the old Groak's tales of self cert leverage, lock up shops and lovable wino clients but it does look like he got a bit damaged in the unwinding of it all.

[sidicks]

drainbrain said:

OI!! Get back to work! You're not being paid to sit on the internet talking tripe!

Shoooo!!

Only one of us is talking tripe, and it's not me.

[NickCQ]

NickCQ said:

drainbrain said:

Nick, there is good news and not so good news.

1) Using your assessment you are only a PM away from being able to grab yourself a great bargain. Seriously.

2) Hate to sound like the forum know-alls, but your last para doesn't illustrate much understanding of oobah-boobah and its relationship with the private hire trade.

1) My valuation is based on your cashflow projections as read - do I believe them? Not a chance!
2) The drivers can do what they like but when passengers get into the habit of using Uber, they never go back. Perhaps Addison Lee with an enormous marketing budget, deep-pocketed PE owners, international reach and corporate client base can compete, but your average mom-and-pop minicab firm is dying. Electric and driverless cars will just hasten the demise.

Do a proper valuation of the vehicles, buy it for a 20% discount to that number and liquidate it ASAP.

Yep, did a little dredge on the cashflows;

groak said:

Across the board I net £500-£1k per car per year. Without the 'economy-of-scale' facilities I'd make next to nothing, and probably lose money on some.

http://www.pistonheads.com/gassing/topic.asp?h=0&t=1036403&r=18694707&hm=166082&mid=166082#18694707

So cut my valuation down to £3.5 mm on that basis (if the cars really are worth £10k each).

[sideways sid]

drainbrain said:

This first year of retirement's been perfectly ok. Everything's (bills and luxuries) been paid for, and cash surplus has bought 4 more properties over the year now adding another £1200 a month to the pot. In fact the one problem is of finding anything apart from more property (boring) which is worthwhile investing in.

Forgive me if I've misunderstood, but you're saying you bought 4 cheap properties out of your (evidently substantial) disposable income. So you're demonstrating compound returns, as you could have bought shares or any other investment out of existing investment income.

The main message is that in retirement, you're not spending it fast enough!

[sideways sid]

richardxjr said:

I used to like the old Groak's tales of self cert leverage, lock up shops and lovable wino clients...

^^^^^ agreed.

...and a 458.

Also why the change of name, and move to Romania? (according to the OP's profile)

EFA - typo

[drainbrain]

NickCQ said:

NickCQ said:

drainbrain said:

Nick, there is good news and not so good news.

1) Using your assessment you are only a PM away from being able to grab yourself a great bargain. Seriously.

2) Hate to sound like the forum know-alls, but your last para doesn't illustrate much understanding of oobah-boobah and its relationship with the private hire trade.

1) My valuation is based on your cashflow projections as read - do I believe them? Not a chance!
2) The drivers can do what they like but when passengers get into the habit of using Uber, they never go back. Perhaps Addison Lee with an enormous marketing budget, deep-pocketed PE owners, international reach and corporate client base can compete, but your average mom-and-pop minicab firm is dying. Electric and driverless cars will just hasten the demise.

Do a proper valuation of the vehicles, buy it for a 20% discount to that number and liquidate it ASAP.

Yep, did a little dredge on the cashflows;

groak said:

Across the board I net £500-£1k per car per year. Without the 'economy-of-scale' facilities I'd make next to nothing, and probably lose money on some.

http://www.pistonheads.com/gassing/topic.asp?h=0&t=1036403&r=18694707&hm=166082&mid=166082#18694707

So cut my valuation down to £3.5 mm on that basis (if the cars really are worth £10k each).

Your actually not far out here Nick. I'm impressed. BUT. I was never great at operating the vehicles and really never realised their full potential. A pro could almost certainly do better than me. Especially a pro connected enough to be able to reduce the prohibitive insurance costs and take repairs in-house. I'd say £2kpa per unit wouldn't be too hard.

Obviously we assess the value of a ph firm the 'trade way' rather than the finance pro way. They change hands not infrequently. Currently the rate here is £10k per driver, which comes to £3.8M. In this case the asking balance on the cars is £0.6M which is a not unreasonable (tho not over generous) £3k per.

So total of £4.4M

That's it usually. Obviously if there's property involved that's a separate issue. But that's how it's done. £10k a skull. Vehicles by separate assessment

I imagine (tho to be fair don't know) that this figure varies from place to place. So Manchester or Birmingham ph firms probably price differently.

I think you're very wrong in your earlier pessimistic assessment of the trade. And today's sensational news is going to rock Uber UK to the foundations. What you may not be aware of is that Uber don't really operate the normal ph way. They take the fares and they pay drivers weekly. That's quite possibly a main reason why they lost the ruling on employment status. In normal ph as I know it all the firm does is hire "radios" to the drivers. What they do with them and when is their own business. Firms also create business for the drivers, but it's them who the end users pay other than for account work. You should also know that other operating differences between Uber and ph definitely do raise issues of whether or not they really are ph. I don't think they are. I think they're something new.

What you'd also possibly be interested to know is that in provincial cities (tho maybe not London) they don't create even the smallest of dents in the income of ph firms. Quite the opposite. Attracted by their marketing, many people decide to take up driving for Uber. But many of these newbies quickly disappear to local ph firms instead. Have a peek at any Uber driver forums and you'll get the idea of why.

I also think it'll be phenomenally difficult for them to become profitable in the UK and I'd say today's ruling makes it next to impossible. So what local firms find is that Uber's presence actually stimulates business a bit. Not only because of escaping drivers but also because of escaping punters. Why would you pay considerably more for an Uber car than for a quicker better cheaper service from local ph? I appreciate it's not the same in London where they may be cost competitive, but here and I suspect in all the provincial cities they're not providing any competitive threat. Especially not for the very lucrative account market including monster contracts like council and NHS. Uber don't do accounts. And that, mate, is just crazy.

[drainbrain]

sideways sid said:

Forgive me if I've misunderstood, but you're saying you bought 4 cheap properties out of your (evidently substantial) disposable income. So you're demonstrating compound returns, as you could have bought shares or any other investment out of existing investment income.

The main message is that in retirement, you're not spending it fast enough!

Sid, you haven't misunderstood. And I would like to invest in something other than more bloody properties but into what? Pensions? Sipps? Isas? Bonds? S&S direct? Premium bonds?

What I read on here and elsewhere doesn't exactly inspire any confidence in any of it. Much talk of returns. Pretty crap sounding tbh unless of course you want to 'go hi-risk' yadda yadda yadda. Much talk of fees. Much talk of the specialist expertise and insight and understanding required to make it go well. Much talk of something vaguely scummy accruing to the advice/fee/ charge aspects. Whereas a flipping' monkey can buy a shop, get an agent, rent it out and make 10% ROI with perfectly reasonable expectation of value retention and even of increasing income. You don't even have to set foot in the place.

The point (once again) of the thread is to reassure anyone who may have been put off by the frankly ridiculous anti-btl assertions on here (and elsewhere) that it is in some way risk fraught and inadvisable as something to depend on for retirement income. Of course anything from sex to driving to btl'ing can be risk fraught and inadvisable if done in a silly way. But especially these days it would be pretty hard - as witnessed by the many many people who actually do it in reality and are happy with it. And I'm one of them.

I've very recently (against my own advice) started an ISA and will obviously see how it goes. Hopefully I learn something useful from it and can get more involved. But I've got a suspicion it'll be no different from previous efforts to use these things as a punter does.

Edited by drainbrain on Friday 28th October 18:36

[DoubleSix]

drainbrain said:

Sid, you haven't misunderstood. And I would like to invest in something other than more bloody properties but into what? Pensions? Sipps? Isas? Bonds? S&S direct? Premium bonds?

What I read on here and elsewhere doesn't exactly inspire any confidence in any of it. Much talk of returns. Pretty crap sounding tbh unless of course you want to 'go hi-risk' yadda yadda yadda. Much talk of fees. Much talk of the specialist expertise and insight and understanding required to make it go well. Much talk of something vaguely scummy accruing to the advice/fee/ charge aspects. Whereas a flipping' monkey can buy a shop, get an agent, rent it out and make 10% ROI with perfectly reasonable expectation of value retention and even of increasing income. You don't even have to set foot in the place.

The point (once again) of the thread is to reassure anyone who may have been put off by the frankly ridiculous anti-btl assertions on here (and elsewhere) that it is in some way risk fraught and inadvisable as something to depend on for retirement income. Of course anything from sex to driving to btl'ing can be risk fraught and inadvisable if done in a silly way. But especially these days it would be pretty hard - as witnessed by the many many people who actually do it in reality and are happy with it. And I'm one of them.

I've very recently (against my own advice) started an ISA and will obviously see how it goes. Hopefully I learn something useful from it and can get more involved. But I've got a suspicion it'll be no different from previous efforts to use these things as a punter does.

Edited by drainbrain on Friday 28th October 18:36

You really need to get your head around the difference between an investment and a tax wrapper, fast...

[drainbrain]

DoubleSix said:

You really need to get your head around the difference between an investment and a tax wrapper, fast...

Nope. I don't. I really need to get my head round a glass or two of this bottle of McGuigan Handmade 2012 that my missus has just produced, slow. And then decide whether or not to buy that Zenith El Primero Rainbow Flyback Chronograph watches.co.uk has secondhand and slightly marked for a glove under 3 large.

It's Friday night. Take an old man's advice. Go out and enjoy yourself.

[Countdown]

drainbrain said:

DoubleSix said:

You really need to get your head around the difference between an investment and a tax wrapper, fast...

Nope. I don't.

You probably do.

You say you've started and ISA and "will see where it goes". Do you know whether it's a stocks & shares ISA or a cash ISA? If it's the latter it won't go very far in the current climate. If it's an S&S how active or passive are you going to be?