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When it comes to property investing, you\u2019d be hard pressed to see a better example of success than fast food giant McDonald\u2019s.<\/p>\n
When it comes to property investing, you\u2019d be hard pressed to see a better example of success than fast food giant McDonald\u2019s.<\/p>\n
While most think their business is about Big Macs and thick shakes, the mega international company actually makes most of its money from real estate.<\/p>\n
It is property investment that has helped McDonald\u2019s grow its bottom line so substantially since the early sixties.<\/p>\n
McDonald\u2019s is a perfect example of an organisation following the golden rule of property investing \u2013 buy land.<\/p>\n
Generally that land needs something on it to help generate income and in the case of McDonald\u2019s that is restaurants and Golden Arches.<\/p>\n
McDonald\u2019s owns the majority of its restaurant properties and leases them back to franchisees. It rakes in billions in rent every year and the properties keep growing in value.<\/p>\n
While most property investors aren\u2019t in a position to buy as many assets as McDonald\u2019s, it is still a model that even individual investors can emulate, if on a smaller scale.<\/p>\n
The success of McDonald\u2019s real estate strategy comes down to land use.<\/p>\n
A typical McDonald\u2019s property consists of 2,000 to 4,000 square metres of land on a busy main road. This was originally to allow for enough parking when most diners ate inside the restaurant.<\/p>\n
The restaurant itself only took up around 500 sq m of land. That meant they were using less than 25 per cent of the area of the land (called \u2018site cover\u2019).<\/p>\n
McDonald\u2019s added drive throughs in the late seventies, which required an extra 300 square metres around the perimeter of the restaurants \u2013 increasing site cover to around 40 per cent \u2013 but also delivering a 25 per cent increase in income.<\/p>\n
In the 1990s, McDonald\u2019s opened its first McCafe, which required an extra 100 square metres, increasing its site cover to around 50 per cent and increasing total revenue by 50 per cent.<\/p>\n
If you\u2019ve been adding up the numbers, a McDonald\u2019s restaurant today takes up roughly 900 square metres on a 2,000 square metres block of land and has nearly doubled its revenue through the additions of drive through and McCafes.<\/p>\n
Upsizing your property<\/strong><\/p>\n When it comes to investing in real estate the strategy is no different.<\/p>\n Buy land in fast growing areas; a growing population supported by plenty of jobs and good existing and future planned infrastructure.<\/p>\n Build a standard three- or four-bedroom home on that land, which works out to be about 180 square metres on a 400 square metre block \u2013 less than 50 per cent site cover.<\/p>\n