[iaw]

Just to echo this, I recently had a lovely conversation with a guy building a business he knew would be irrelevant in 10 years with the goal of selling in 3 years to someone who didn't realize that.

I will never buy a business, real estate is a much safer bet.

[beachy]

> a guy building a business he knew would be irrelevant in 10 years

To be fair, almost any software based business could be irrelevant in 10 years.

[bombcar]

And often founders underestimate how long a business can run even after it is “irrelevant”.

[shard]

Real estate comes with its own set of problems.

First is the large capital outlay as compared with a small web project, which means many more eggs are in that one basket.

Second is the slow turnover, which means that you may be waiting for years for a good property (since if it's a good property, there are only a few situations where the owner would sell), and if you choose poorly, you will be stuck with the poor property for many years (as no one would want to buy it).

Third is you will still have to watch out for your property becoming irrelevant, for example for a retail store, either due a downturn in the trendiness of the neighborhood driving out business, or perhaps undesirable construction in the area (e.g. a mall across the street that takes all your foot traffic).

Really the safest way to invest in real estate is through REITs, where the risk is spread across many properties.

[jaxn]

A mall across the street pretty much universally increases the value of existing retail in the area due to increased car traffic. But the mall across the street shutting down or converting to non-retail use would fit.

[shard]

Not universally true. Depending on points such as competing stores in the mall and the parking situation, number of customers can decrease for the store outside the mall. For example, you are a cellphone store with no parking and the mall will have 3 cellphone stores and a giant parking structure, the mall will hurt your business.

[gpapilion]

This is basically Don Fisher’s (gap founder) advice for planning a business. Assume you’ll go out of business in five years.

[alex_g]

Yeah that's messed up. Any time you're buying anything, but especially a business, you need to do your due diligence.

Perhaps I'm naive, but I think your risk in buying a business goes down if the current owner under-appreciates what they have, and you have the skills to do it better than them.

[iaw]

> your risk in buying a business goes down if the current owner under-appreciates what they have

This is completely true, my sentiment is more for the idea of a "turn-key business" acting like an annuity. I don't think every business for sale is going down but I think there's a large enough risk case that I'd rather avoid it.

[raspasov]

Don't you think that's a bit of an extreme statement? There must be a price where the price-to-risk ratio makes it worth it. Nothing is 100% certain, after all. Every investment has some amount of risk.