What was your best investment?

[Northstar]

I was just looking over some paperwork and ran across the documents where I purchased my first business in 2011. It’s a restaurant that was 2 years old at the time, and my partner and I paid $90,000 dollars for it. 35,000 for equipment, 10,000 for inventory, and 45,000 for the “business”. We negotiated the seller to take $40,000 down. And hold the 50,000 note for one year at 0 interest. So we let the restaurant pay off the 50k owed at zero interest. I put up $20,000 and my partner $20,000 to get the business runnning. Since taking it over we have over doubled the revenue and increased profitability as much as possible. Last year it brought me about 250k after taxes. On a 20k investment! Since buying it I’ve received well over a million dollars off of that 20k investment. Looking back I wasn’t a savy negotiator or anytning but 40k down and zero interest with owner financing was freakin awesome. Buy far will probably always be my best investment. Any other stories out there?

[bwall]

I might call that a great deal, but not an investment, really. You bought yourself a job. And, it worked out well, very well in fact (Congratulations! btw). It took more than just your hard work for it to throw off such profits--your know how and skills were very important. I know this because I know that if I bought the restaurant for $40k, it'd be out of business today.

An investment is something that you get returns on after discounting any management/upkeep costs that might be incurred as a result of ownership.

The best investment I'd say I ever made was taking a year off at age 23 and traveling the world on a shoestring budget. The knowledge I gained has helped me throughout the rest of my life. Total cost; under $15k, incl. opportunity cost (I had almost no earning power at the time). 

[Step37]

I bought into an industrial supply business in 2014 (sole owner wanted me to work there to manage the books so he could focus on selling). It has turned out remarkably well, but I’d agree with bwall that I essentially bought myself a job. I bought a 10% stake for $75,000 (with cash I had). As an employee, I draw a good salary (full-time 72K plus up to 50% bonus), and have collected 90k in dividends so far. I anticipate getting 15-50k/year in dividends until we sell the business, but of course there are no guarantees.

In addition to the dividends, I sold two of my ten shares to a new partner for 25k each, so I have realized a 35k gain. My eight remaining shares are now worth 35k each (based on consistent valuation method used throughout) . . .  I would like to only work .5 or .6, but it’s proving to be too busy, despite the fact that I hired someone to take on many of my responsibilities. Good problems, I know. I’m just not motivated to work as much as I could (burnt myself out in previous job where I was not an owner, and went directly to this), as I already have enough; more money is not a driving force for me. Thanks, mustachianism;)

Ideally, we would sell tomorrow and I would be done. I have no passion for this, but I do enjoy my coworkers, and it is gratifying to do well. Realistically, I don’t know when a sale will happen, if ever. We are just trying to grow for now (and by we, I mean they — I am just trying to keep up with the growth and lead a balanced life). I’m the reluctant entrepreneur.

Aside from this, my house has been a fantastic investment. Values have gone up a lot in the 17 years we’ve lived here (paid 145k, now worth easily 500k). It’s paid off, and the basement suite currently brings in $1000/month, so we basically live here for free. That covers taxes and utilities easily.

[SC93]

My best investment was the first date with my wife. Best thing that ever happened to me. Money can come and go but she can never be replaced.

[Smokystache]

In terms of entrepreneurship, my best (early) investment was using a professional graphic designer. My first products were print-based and the time and energy I saved by not needing to learn complicated programs and design skills allowed me to write/create more.

While one shouldn't automatically outsource everything - especially when you're just beginning and trying to bootstrap, but you can also spend all your time trying to learn to program, code, build websites, learn graphic design, etc. etc. and lose lots of time where you are the one doing key things you can't outsource like create product, build relationships, etc.

[khizr]

The best investment I made was buying a business in October 2008 that was slowly going bankrupt due to bad management. Over the next 7 years, we increased the revenue by 4.5x and grew the team from ~20 to ~135 people. It was a super scary time to purchase a business in 2008, and I am thankful for my business partner keeping that process going when I was getting some cold feet. In hindsight, it was an even better decision than we thought as we bought the business at around a 1.5x multiple but sold it for a 3x multiple.

the other best investment when looking back was hiring a coach, and doing 360 reviews with the team. It really helped me to see what I was doing well, and give me some confidence that I was lacking. Weakness too but I knew most of those and focused on them too much.

[SC93]

I guess mine sounded lovey-dovey lol. What happened since I met her was that my thinking about life changed and I buckled down to save WAY more money and enjoy life instead of being reckless with just about everything.

[MrThatsDifferent]

Me. I was my best investment.

[Northstar]

Great stuff guys, great stuff. It’s good to see where different peoples minds go when they hear the word “investment”, some think of a business or stock or deal, some of their significant other, some think of time taken to spend with themselves and reflect and learn who they are. All great stuff.
Bwall, you are correct, when I purchased the business I wasn’t thinking that way as I was only 21 and really had no clue what the hell I was doing other than knowing how to run the kitchen but you’re right, I bought myself a job. I have since realized this and it’s sorta brought me down thinking about it. We have a successful business, but knowing I can’t sell it to anyone sucks. Who the heck wants to buy themselves a job ?! I need to put good management in place to make to sellable. I’ve got about 5 years to get that done before I’m out. I may sell sooner to my business partner. Just let him buy me out. I’d love to retire at 30 but that’s only 2 years away so we will see.

Khizr that’s awesome you turned that place around and grew it so much. I know that took a lot of hard work but it’s very rewarding to see the fruits of your labor when it all comes together.

Sc93, I feel ya man I adore my woman, she puts up with my shit and takes care of me cause I’m a man child at times lol. I get on a kick and get focused on doing something- flipping a house or something and I’ll forget to eat, won’t have any clothes clean, just forget everything else and she will bring me dinner, take cAre of the house and just keep me alive basically! She makes the idea of early retirement and FI real to me, I want it for myself but I want it for US even worse. To be able to spend that time together that most couples never get, or don’t get to enjoy the same way as they are 65+ before getting to that point. I’m grateful for sure.

Step37, sounds like you’re doing great. I love to see and hear others successes it gets me excited ! We are experiencing a lot of growth in my area right now and property values are increasing but I doubt I’ll ever see growth Like that! I could probably sell now for a 100k profit but the problem is I couldn’t replace my house with the payout from my sale. So looks like I’m staying. I’m with you on not being passionate about the business, I enjoy what I do, running the restaurant and all, my family comes and eats and my friends and I know half of the town, we have a very lively atmosphere and people enjoy our place and that’s awesome, but my heart just isn’t in it. I couldn’t do it for 30 years. To stressful, but I’m sticking it out and saving up more money to make the switch into full time landlord hopefully in the next few years. Sometimes we just have to do what’s most logical weather we find passion in it or not. But we both know we will be into sowmthing that drives us in the near future. Stepping stones to get to where we are going.

[Step37]

Northstar, I hope you are able to find the right person to manage the day-to-day of your restaurant. It sounds like a great business, but I completely understand your wanting to focus elsewhere. Even if you give up half of what you’re getting annually to fund this position, that’s still an incredible return on your initial investment.

There was an excellent restaurant very close to my house (opened same year we bought house) with what I imagine is a similar vibe. The owner was always working there, gregarious guy, made everyone feel like family - Place was always packed with neighbourhood (and beyond) residents, lunch and dinner. Over the past year, he sold to a big restaurant group in my city and it’s reopened under a different name. He’s still involved, but not as intimately (wants to spend more time with his wife and family, understandably). Looks like it’s still busy; I hope it remains so. But I think it’s hard to replicate that “family restaurant” feeling when it’s more corporate.

I second what others have said about choosing the right (life) partner. My husband basically kept me alive when I was workaholicing for five years; being supportive of each other and on the same page financially is a huge part of becoming FI. I’ve convinced him that we are in a place where he can pull the pin on his job this year, and we are both pretty excited about that! A two-month layoff a couple years ago made him realize that he could be perfectly happy and occupied without a 9-5. One of us might as well retire:)

[calimom]

@Step37 and @Northstar those are great entrepreneurial tales ~ very inspiring!

My own small business story is a bit different. In 2007, just after my husband died, I moved with my 3 children to be near family in a medium sized city. The house I was able to purchase was pretty reasonable, at least my SF Bay Area standards where where we had moved from. A year later I started thinking in earnest about how to provide a living. Went on a few job interviews which were demoralizing and low paying. There was a children's consignment store that was up for sale for $140,000. It seemed ideal, I'd be able to bring my toddler daughter to work each day eliminating the need for childcare. But the owner would not finance any of it and the two banks I talked to didn't think it was a good risk. Plus it was retail, which meant 6 days a week, and I would have been tied to the location.

And then quite by a strange set of coincidences that involved a play group and a neighbor of a friend wishing to sell a long time interior plant rental and maintenance business. We met and hit it off. She wanted $30,000 and was more than happy to take half down and finance the rest over 18 months. It was home based and we just moved inventory from her garage to mine. A part time employee was glad to stay on and an old service vehicle was included in the deal. I took no draw for the first year and paid the loan off year.

Moving forward, I updated the business with a website and brought invoicing and proposals into the 21st century. The old van was replaced with a newer one. I joined local business groups and went on sales calls and designed new accounts. Another part time employee was added. It took awhile but the business tripled in size. Much of it is in desirable monthly recurring revenue and then there are add on sales and holiday decorating jobs. A couple of years ago, I started another venture in home staging and keep that small and profitable. Bothe businesses outgrew my garage (plus a neighbor in my HOA was complaining) so I was able to purchase, in cash, a small warehouse condo in an 8 unit complex.

I feel so, so fortunate to be a small business owner and to have control to certain degree of how much I work. There are crunch times for sure, but I've been able to work, pay employees well, and still be able to keep on top of my priorities of being available for my growing family. No one would call me rich by any means but I contribute well to my retirement accounts, taxable fund and 529s.

So, I'm pretty satisfied with the $30,000 initial investment and what it turned into.

[Step37]

@calimom, what a cool story. It is quite amazing to me how these things randomly come about . . . and work out so well. Okay, they work out well when the right person takes it on and does a great job of running things, which you clearly have. What you ended up with sounds so much better than retail.

[khizr]

Awesome stories all, thanks for sharing so far as I am really enjoying all of these :)

[Gone Fishing]

From 2004-2008, I bought some stock in my then employer at a 10% discount.  They sold the thinly traded company for 2x trading price.  I received stock in the purchasing company which has since tripled in value. So call it 6x on my initial investment.  Still not nearly enough to cover bone headed moves like holding on to excessive cash from 08-12 and not maxing out deductible accounts!

[kpetar]

Building a house without a bank loan!  I know, it sounds like a science fiction movie to a lot of people but it is NOT mission impossible. I did it and it was the single best financial move I have ever made in my life.

[BlueHouse]

My college diploma.  I say diploma and not education because I don't know how much I really learned, but I know having that piece of paper qualifies me for jobs I otherwise would not get. 

I know the student loan thing is out of control now and many students have incurred debt they have trouble repaying, but the student loans (and Pell Grants) I received allowed me to go to college when I otherwise could not have afforded to. 

[nottheturkey]

Not my highest returning financial tool, but from a purely (almost) passive investment, it was accidentally keeping my first home as a rental. Bought it in 2001 with $10k down and we net about a grand per month in cash flow. And have a few hundred thousand in equity.

[nara]

I graduated with a MA degree in Psychology. It's essentially a useless degree and most of my peers in my masters program ended up going back to school and taking out more loans to get a degree in something more useful like teaching. I, however, ended up going for a post-grad certificate program (5 online courses--part of which was paid for by my job). This certificate program allowed me to obtain a credential for which I can bill insurance companies.

My certification suddenly became hugely in demand and I was able to double my income immediately. Fast forward 10 years, and I own my own company and supervise the fieldwork of candidates who are also obtaining their certification. A small $6000 investment in an online certificate program opened doors that I never could have imagined!

[Cwadda]

I guess mine sounded lovey-dovey lol. What happened since I met her was that my thinking about life changed and I buckled down to save WAY more money and enjoy life instead of being reckless with just about everything.

I liked both of your replies but to be honest with you, I'd really want to hear about your cleaning business.

[Cwadda]

My story is an ongoing one.

I quit my job in sales last fall because I was unhappy and did not think I was doing a good enough job (my sales were lateral, good salespeople need to have steady growth). I worked in a very small business (principal and myself). I liked the idea of small businesses, but feel like I lacked the skills and knowledge for this particular business. Still got the entrepreneurial bug, though :)

Around the same time, I began experimenting with buying and selling things online. I had researched a bit about buying things in stores and reselling them on Amazon.com, Ebay, and other sites. I bought $500 worth of supplies, started using credit cards to purchase inventory, and doing it part time. I eventually worked up to doing $10k/month in sales with a 28-30% profit margin. This allowed me to quit my other job because I was making more money, working fewer hours, on my own time (that's the goal, right?).

Which brings me to now. I am still averaging $10k/month in sales, but am now considering on taking on some more risk, scaling the business, opening a business line of credit, etc. I'm a bit nervous but think I'm ready to take the plunge. Any advice from other small business owners? It's definitely a little nerve-racking.

[TheWifeHalf]

If I consider it an investment in the family's well being, our best investment  was deciding that I would be a SAHM, rather than return to work after the 3rd was in school.
It was a 90% financial decision at the time. At the time, TheHusbandHalf was taking advantage of over time opportunities (1 1/2 - 2+ times his regular hourly wage)
I would not be able to find employment worth $50-60/ hr and we just didn't think we'd be able to handle all the changes, sometimes at the last minute, we'd have to make.
He works overtime now rarely, but is always at the top of the list to make the decision. The way it's set up now, working overtime in one week pays 11/2 - 2 times more it does in the other.

As it turned out, our kids benefited. They learned patience  since, they were taught that they were individuals(Mom can only do so much), they learned the value of money because they knew Dad worked really hard for all of us (we shared with the kids with a weekly stipend), they learned to finish something they started (the rule when joining things - you have to finish), they learned the value of being by themselves and not requiring busy, active social lives all the time.
They learned the value of an education, and the value of common sense.

I tried to keep the home a welcome place to come home to after his work, and was able to enrich their lives with outings. They learned to follow rules, and why that's important.

All 3 work in the medical field and make 70-90,000, without college debt. (If they wanted to get rich, they were given the self confidence to work on that, but t knew they knew they were on their own.) They were not perfect of course, but we had no drinking or drug problems, and all 3.5 or above in high school.

We had a discussion with the kids last year, and none of them feel they 'lived without' growing up. That tells me they'll be able to get through adulthood with a little less.

TheHusbandHalf and I still think it was our wisest investment.