3 min.
Editorial Invest in Slovakia
Even the grandest and most positive investment plan will not turn out well if you put it in the wrong place. Unfortunately, this is the case. And we encounter it often.
When we talk about location, place of business, I always remember this one experience of mine. I've told my friends about it about 100 times. Read carefully.
Some 10 years ago I was at the Christmas markets in Vienna. Mariahilfer Straße was hopelessly crowded. I was looking for a restaurant with a free place to eat. I found it somewhere three streets away. It was absolutely quiet. Maybe only 300 meters away from the total hustle and bustle. But really great food.
They were selling fantastic things in this quiet alley. Delicious strudels at half the prices I've seen at Christmas markets. Beautiful Christmas decorations and home accessories. I was thrilled with it. Well, it had one problem. No one was there! These shops could easily go out of business in time.
I'll be back in 30 minutes. I walk hungry through the aforementioned Mariahilfer Strasse and a guy who had a weird moving cart right on the crowded sidewalk, selling plain mugs in two colours with Vienna written on them. I think it was blue and red.
Do you know what happened? There were about 50 people standing around this trolley, waiting in line, to buy a mug, then 10 euros a piece. I was amazed at this circus.
That's called picking a strategic spot!
He could sell at least 1000 boring mugs a day. With a margin of 8 euros (10 euros selling price - €2 cost) his profit is €8,000 a day.
And 300 meters away great shops are dying due to lack and disinterest of shoppers.
The same happens in any other business sector.
Ak teraz otvárate internetový obchod so svietiacimi papučami, ktoré mi osvetlia nočnú cestu z postele na WC, zvoľte si, prosím, starostlivo lokalitu, kde chcete tento produkt predávať. Ak to myslíte vážne, tak verím, že vašou lokalitou nebude len Slovensko.
Are you setting up your dream ski lift? Unless it's high on the iceberg, I wouldn't get into it as an investor today.
Ask any real estate agent what is most important when choosing property. The answer will be, location.
Imagine upscale residential units in a modern building, equipped with environmentally friendly technologies, renewable sources for energy saving, with an adjacent park full of greenery and a children's playground.
Build it in a location where unemployment is high. Where there is insufficient infrastructure, roads, lighting. Build it outside the district town, where there is no easy transport connection. In a village with no schools, nurseries, creches.
You will obviously have a problem.
Why? Because you won't attract enough buyers who will pay as much as you need.
In Vienna, it was enough that the restaurant and other shops were 300 meters from the main street and the turnover was incomparably lower compared to those on the main street. And it made absolutely no difference that the shops off the main were of better quality.
In the real estate business, all we have to do is stray 3 kilometres in the wrong direction and we can most certainly fall on our arses.
But the cost of running a building or any business is the same as when you build or sell on the best street. But the difference is that you are selling At 50% prices for a far smaller group of people.
Location has a huge impact on how you will fare. And unfortunately, often it doesn't matter how good a product you're selling.
Build in a good location houses, apartments, row houses, industrial halls, warehouses and most likely sell them.
Location is far from the only factor due diligence of the investment opportunity. At the outset, however, it tells us a lot about the realism of the investment plan.
Another, equally important attribute is TRH. Every investment project needs a market and this needs to be explored.
I'll come back to the mugs from Mariahilfer Straße in Vienna very briefly. What happens if you decide to bring your own trolley to Mariahilfer Straße and start selling mugs yourself?
The buying power is split between you and the guy who was already there. Five more will do it, and your results will be significantly worse than you expected.
And what happens if even on the best street in the city developers build hundreds of new apartments and the market becomes saturated?
Next time I'll write to youhow real estate magicians are dealing with this situation. From Donald Trump, who started building Manhattan in the 70s, to Slovak investment-development companies such as J&T, Penta, HB Reavis, and others.
I'm keeping my fingers crossed for you on your passive income journey.
