Yesterday, a friend of mine came to see me. His name is Rudolf Kotik. Rudolf is from Austria, although he has lived in the Philippines for 21 years now! He certainly is a long time resident, and in many ways, Rudolf has taken on many Filipino traits. Most of his actions, opinions and such are very Filipino.
Rudolf is in the Franchise Development business. He used to work in Franchising for McDonald’s many years ago, so he is a serious person in this business, not just some “Johnny come lately,” if you know what I mean.
Rudolf lives in Manila, but his work brings him to Mindanao at least once per month. I have known Rudolf for nearly 8 years now, so almost as long as I have lived in the Philippines. We originally met when I hired Rudolf to do some work for me on developing a business that I own as a franchise, back in 2001. Rudolf developed into less of a business contact, and more of a good friend. Rudolf’s wife, Margie is also very close with Feyma (and me too), and Rudolf (or RK, as he is commonly called) and Margie are like family to us in many ways.
When I had a stroke in 2001, RK and Margie came down to GenSan and spent a lot of time with me, giving me moral support and even financial support. I owed RK some money for the franchising work that he had done for me (although I only had one more payment due to him), and he told me not to pay him, because I needed the money to take care of my health, not for him. I argued with him, but he would not hear of taking that last payment from me. I only say all of this to show just how close Rudolf and Margie are to us, and how much we treasure their friendship.
Well, as I said, RK stopped by to see me yesterday. He had a few hours before his next meeting, and we had time to catch up. We started talking about the World Financial Crisis. I asked RK if he could see any affect in his business. I was kind of surprised when he told me that his business had been greatly affected by the crisis!
“How have you been hurt?” I asked Rudolf.
“I didn’t say I had been hurt, I said I had been greatly affected.” replied Rudolf.
“Yes, in what way?”
“Well, Bob, my business is booming, and I give the crisis all the credit for it!”
What? Rudolf went on to explain that a lot of people are buying franchises right now. I continued to question him, and it turns out, according to RK, that people don’t know what to do with their money. Banks are failing all over the world. Other non-bank financial institutions are failing. Shifty people are coming out of the woodwork with some scheme or another. People simply don’t know how to keep their money safe. What are they doing? Buying franchised businesses! So, his sales are skyrocketing. It makes sense too, in my opinion.
I was really happy to hear that RK is thriving in these bad economic times. I hope that things only get better and better for him!
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I’d like to take a moment to wish a very Happy Birthday to fellow LiP writer, Rusty Ferguson! Rusty turned 50 yesterday, but unfortunately I did not know that it was his birthday. Happy Birthday, Rusty!
Hi Bob – And I was just talking with a friend here in Chicago about the economic crisis affecting everyone (negatively). Then here is your friend to prove me wrong! Well, I am happy, somewhat, to be wrong and hear someone doing alright amid this mess. I think I came across RK's website and various franchises a while back. I hope I bookmarked it cause one such opportunity really caught my attention.
i just read on the papers yesterday that carlos slim, the world's richest man & from mexico, just acquired a 17% stake of the NY Times. The article went on & said that a lot of affluent billionaires are moving to purchase large valuable assets at a discounted rate because of the current economic state.
probably not the "shifty" type you described (or maybe), but it can be a lesson for the entrepreneurial type. there is always opportunity to be made, albeit in a much smaller scale.
hey bob, maybe you should go check if the sunstar is up for grabs. i'd like to be friends with the future w.r. hearst of mindanao.
Interesting topic but I wouldn't go near a franchise if you paid me money. With all due respect for Rudolf, franchising in any form now adays is like sticking herion into your veins. Too much work for too little return. Especially in this Country where money earned wouldn't be worth getting out of bed for in the States. Yes I am sure if you are a major that is a differetnt story but how many of you have a spare $250K for all the expenses to set up a decent franchise. Sure you can get a small kiosk operation but it ain't worth the effort. Now good businesses would be
1. Bed Savers or boarding houses – These business you can make a fortune on. I have one friend who took a 120sqm townhouse in Davao of all places and now generates over $70,000p a month using it as a boarding house. I think it costs him about $30,000p on a mortgage. Now thats a business. Multiply that a few times. I have another relative that has a 2000 bed saver and makes 80p a day on each bed and has 100% occupancy plus he has a canteen which makes him money on all the food consummed on premises.
2. Pawn shop – you can get valuably jewelry for less than 50% and earn 8% a month or get the jewelry
just a couple of other ideas
I personally buy cheap land and grow copra. I am able to buy hectares for about $1,000 usd. After seven years each hectare will generate about $1,000 net profit per year. @ years to pair off and then pure profit.
I am going into fish farming next: mussels, oysters, shrimp, grouper, etc….
just my 11 cents
Foreigners cannot own media in the Philippines, Macky. I am not surprised by this move in the USA, though
Hi Robert – yep, I'm aware of that being part of the '87 constitution. that was just me going after Bob. He bit … barely 🙂
Hi Sir Robert
Leaving your money in the bank is a waste of time , on us and euro accounts you would get no interest . But If you put it in pounds sterling you get a small amount of interest 3 per cent if your lucky . But who wants pounds. Last week i was in harare Zimbabwe . On Monday bought 4 x meat pies Zim dollar 60,000,000,000 each . Next day bought 4 x more pies price .Zimdollar 200,000,000,000,each . How is that for inflation.
I think you mis-understood Bob regarding the Copra investment.
Example: you buy 100 hectares with $100,000 USD. Basically you said you would rather rent than spend 100k for a house so I am assuming you have a spare $100k. So for arguments sake, lets say you can get a generous 10% on you money annually so you will have about $200,000 in 7 years from your 10% annual return on $100,000. (if you get more safely please tell me more about where you invest…curious minds want to know)
Me on the other hand has to wait for seven years before I make any money but then I kick your collective A…s big time and forever thereafter. . At the seventh year I will start earning $100,000 annually on my 100 hectares. A 100% return on my initial 100K investment. Year eight $100,000 is pure profit and equals your return for the entire seven years. In year nine you earn $20,000 while I earn $100,000 and I get to take the money out and use it as I please.
This is not something I learned on my own. I have my wife to thank and this is her families business. They have 12 kids each of which has earned aproximately $35,000 each year for over the past 10 years and the price seems to be going up. And they have had this land for over 50 years and never suffered any calamity with the property. Best part is they don't work one single day. They have tenants who do all the work and the tenants get a generous share over an above the net.
Actually your column asks where to put your money and so far there has been little discussion about that which I am surprised about. Franchising is one idea and I'd be interested in which franchises you can generate a 100% return on invested money year in year out. Also, any other investment ideas you may have. Funny that at least to me this is the most interesting blog topic which has yielded the most lame responses. Many foreigners here need to optimize returns so that is why this topic "Where to put your money" is so appropiate
Now that is more like it. In fact, Bob thanks for willing to carry this discussion more without getting defensive as I see sometimes here. So funny I did forget that little tidbit about startup and maintenance costs which run about 5000p a year per hectare. So yes in 6 years will run 30,000 per hectare so why don't we call it another $1,000 so year 9 to break even.
Even so I still feel more stable with the copra as I know the history of this crop at least as it pertains to my in-laws and their history and futrue copra investments they have made in other parts of Mindanao. That is not to say I wouldn't pursue a franchise but I see them closing rather than expanding in most places around the world now. Perhaps Kuya chitos is different I think they are the aberration and not the norm.
Back to franchising. I wonder why with so many people having investments or more importantly neededing them why more people aren't doing franchising with these types of return you mention. Are you???? I mean it seems a natural.
One thing I'd like to clear up and this pertains to your particpation on the blog. Most blogs I am on are pretty much topic discussions. A topic is put up and a discussion follows with many different participants between members. On this site it seems you are the only one that answers posts. The point is maybe only a few of us actually know that anyone can answer anyone elses posts. I certainly see times when a post can be answered with another opinion on things other than yours. Anyway just wanted to clear that up.
Thank you for clearing that up and from now on I too will jump in if I have something to say. One of the things that I think precludes people from doing it is I honestly don't think they care about any post other than their own. Oftentimes the comments are identical to ones preceeding it so that in a way supports my point. Makes for more intelligent discussion you would agree with many chiming in!. With you answering all these posts there is a chance it might go to your head and we wouldn't want that to happen right ha ha ha??
Hey Bob i think Steve is trying to "pull your leg" if he reads your articles then he would know what you are talking about ….." Everybody marches to a different band"
I know i do Bob good article Bob .I plan on getting a franchise of shooting sand crabs …hee hee 🙂 franchises are open i this field 50,000 pesos ..anybody interested ?
Phil N Jess
I would have to say, quite informative. I never knew it took 7 years from bare land to copra production. I would have to wonder how one would factor in the risks of not being able to actually own the land as a non-Filipino citizen. I suppose that would be a fundamental part of the business risk therein.
Mayoong Buntag Bob,
Where to put your money? Hhmmm, you could put it in my pocket… I can hold it just like the bank and not give you any interest…
I was surprised to hear that more Philippino's are investing money into projects like these instead of banking on the financial institutions to protect it for them.
Hi, Bob!
Really nice story about Mr. Rudolf Kotik! I'm glad to hear inspiring stories about people, whether locals or foreigners, who are successful in their endeavours here in the Philippines. He seems to be a very generous man, too, and a real friend to you. I'm also glad that there are still people who see lots of opportunities in life even in today's seemingly dire global economic situation.
Furthermore, I have a fellow manager friend in the company we work for which is a multi-national one, but he had several other sources of income, mostly small businesses. He told me that he does keep some money in the bank, but only to invest much of it over and over again! I really find him a financially-savvy person. If only for economic reasons, he told me, he has no reason to leave our country at all! I call him 'maabilidad' (in Tagalog) which means a person with superb or exceptional (economic or financial) abilities in life.
More power to you, Bob and to Mr. Kotik! 🙂
And yes, A Happy Golden birthday to Rusty, too!
Hi Steve and Bob., This is a very good discussin, I was looking for something like that for some time where I could get some advice and ideas on different types of investments.
This COPRA seams to me a good business, I heared that land is cheapest around Zamboanga del sur & del norte. But the worry is I might be kidnapped there, hahaha. And where else can I get a hectar for $1000? . Lets say I will buy 100 hectars, and what then, who will plant the palms, who will look after them in years to come?
The biggest producer of coconat oil is Malaysia, Expatriots in Malaysia can own their own land and have their own businesses, but the labour there will be more expensive I think.
Bob,
I'm sure you know this allready but for Filipino nationals theres quite a few ways around CARP and for this reason it isn't unheard for pinoys to own over 100 hectares or even many thousands of hectares in some cases.
Justin
Bob,
I just noticed in the articles above the fellow says he grows copra, this is highly impossible as copra is simply dried cononut flesh, you would grow coconuts and produce copra while turning the shells into coco shell charcole to minimize waste and maximize proffits. For work that goes into it though Id sure not invest 100,000 dollars into as money would gain far faster profits by setting up copra buying stations in barrios and buying at lesser price while selling in city at a profit.
Justin
Bob,
That's true but in all circumstances one is not breaking the laws while bypassing Carp. For example a family corporation can be set up, property may have been acquired before 1935 (?) and passed down through hereditary succession etc etc. My wife's family has far more than 100 hectares but are in no violation of CARP nor is their land subject to those laws due to the way it was both obtained and held. I knew some people in Philippines who owned many thousands of hectares but also wherent in violation of CARP. I highly doubt aquarian reform will ever truly be anything with teeth for the reason that many of the nations political figures and prominent business personalities where either land grant families or acquired vast land holdings through other methods, theyd not shoot themself in the foot by pushing true acquarian reform legislation.
Justin
Bob,
I'm assuming Steven is a American or other type of western national so any attempt to circumvent Philippine law would be a violation of Philippine law. But assuming he's married to a Filipina his wife could form a family corporation and own more than 100hectares totally legally. This is done routinely by politicians in order to both circumvent CARP as well as hide their assets. For example we lived in Butuan and the mayor there owned many thousands of hectares not acquired before 1935 or that avoided the laws through the hereditary succession clause (land must have been obtained before certain date to use the clause) but they avoid CARP by holding the lands through a holding corporation designed for the purpose (D.O. Plaza Holding Corp.) . I'm assuming its very common tactic as when you look on the i-sites you see many political figures that put as businesses interest some position at a holding corp.
http://www.i-site.ph/
Justin
hi bob,
My father-in-law is in the bamboo business for a very long time, he have at least 25 hectares of land, he mainly grow mango trees, the bamboo is a kind of accidental business only, one part of his land is growing a wild bamboo and he usually cut-it-off and throw it away, one of his friend told him that he can make money from the bamboo, he starts selling bamboo since 1980's and he makes more money with the bamboo than the mango. it will only take 2 months for the bamboo to grow fully, i believe many of his client are a fish pond owner, they use bamboo for fish cage and the bamboo must be replaced constantly (1~3 months), so for may father-in-law, he constantly supply the bamboo every week as he already have a base client, the thing is the bamboo only required small piece of land, as a matter of fact, the bamboo trees only takes approximately 5000/sqm of his land or half a hectare. an 18 wheeler truck filled with bamboo goes for 30 thousand pesos, and he is making 2 of 18 wheeler truck every week, that is 60 thousand pesos every week minus operating expenses. you do the math for each month.
now that is a good business for a small piece of land.
I have been looking into copra production myself and even mentioned it on this website a month or so ago. I have seen land with coconuts for 1k-1,500 (US) per hectare in the Misamis area where my wife is from and were moving too. Without coconuts less than half that. The problem we keep running into is people double the price as soon as they find out I'm American. Contrary to most Filipino misconceptions I cant afford that. I'm wondering how I can set it up so they cant find out till later who I am. Obviously whatever I do it wouldn't work with the families neighbors so I couldn't likely buy land close to them.
Anyway your figures don't include whatever you are growing between and later under the coconuts. I know many growers don't grow anything else but I don't understand why as many people even grow corn under them. Is their a reason some don't other than work?
As far as planting costs I was told you just have to place a fresh coconut on top of the ground, they sprout in a month or two and start growing. All you have to do is get them properly spaced. Not much cost to that unless you need to clear brush or something.
I read some government website that claimed they didn't enforce CARP on land that was over 18% grade and most copra land is hills. I just wonder if that is the law or the way they were implementing it? If that isn't the law they might make an exception if your white to how they implement it. Especially if someone with connections wants it. I guess I need to get registered and ask about CARP over in the forum.
Hi Bob . I am not a 100percent never will be but ones got to get on with life not sit round crying over spilt milk Must be doing something right though . As Angie is producing another addition to the family in May. This addition has halted my visit to Davao in April plus i was planning to visit the Cun ninghams in Cagayan.
But what to do with money maybe but it under the bed . It really is a differcult aspect of lfe nowadays cash.
I missed some good posts. – John H, Justin, and all interested parties. Yes we grow coconuts and copra is the by product and there are actually other uses for the coconut shell itself. Frankly, I would rather not address the nuances of buying vast amounts of land and loose lips sink ships. Point is where there is a will there is a way and we help other people make money by doing it so where is the harm. I will say that I find it to be total horse shit not allowing foreigners to own land here in the country. It is a scheme by the big Old Line Family landowners to keep it that way and many of them are you guessed it IN GOVERNMENT so it will not change for eons. Hey didn't the term for aquarian or is that aquarium reform ha ha ha end last week. I did mention the 5,000p cost per hectare for start-up on planting trees. Figure on about 60 – 70 max trees per hec. Some good fertilizer and kaazam you are in business. You should have a tenant on the property and their take will come from the harvest which is 3 x a year. They will harvest it and bring it to market or you can have a family member handle the transportation and money angles. When you stay in the Philippines as long as I have or Bob you get to know the ropes and there are many things you can do to make extra money. Some more creative than others. Bob is a public figure so he has to be on his best behavior. I am not a public figure and nor do I own anything in this country not even my own money. I Turned that over to the wife years ago. I guess I better be nice to her or I won't get my allowance. Foreigners in this country have to be vey careful about investing here. And don't be in such a hurry to give it over to you your wife unless she has business savvy and you can truat her with your life. Otherwise you are better off earning 6% in the commercial banks.
Bob,
A little off subject, but I wonder if you have heard, or can ask RK if he knows what happened to Kenny Rogers. It has been closed in Gaisano since Jan 1 and I heard there was one at SM and it has closed too.
We own a small, (2.5 hectares), copra farm, and we don't make any where near 100% ROI/year return on it. My apologies if I read Steven's comments incorrectly, but I would **guess** that unless you are a large producer, you will not see the returns he does.
Our returns are closer to 10% of investment/year.
Hi Ken – The number of trees and the number and size of coconuts on each tree have great bearing on this equation. For example my inlaws have trees over 50 years old that produce 70 coconuts every three months. Where they grow also has phenomenol soil for growing which is an important factor. Mind you this is not a hobby for us but a business to be exploited for best monetary outcome and like anything else there is a certain amount of expertise and we plant trees that grow to be very dense with large coconuts. Also on the sales end you need to work with companies that give you the best bang for your copra dollar. Aside from copra there are many other crop/livestock/and aquaculture areas where there can be large descrepancy in outcome mostly predicated on expertise involved in the growing process. For example the Taiwanese are able to grow something like ten times the tonnage per hectare of pond raised shrimp. This has been a great frustration here in the Philippines and many here have been fored to bring over their expertise. Many are starting to match the taiwanese. I am sure that indonesians might have a leg up on us for growing Copra. So while 10% seems very small there are probably many many mitigating factors for this to occur.
Steven,
Are yall doing cycling by planting in advance so new trees will become harvvestable in near future? I ak because its right around 50yrs of age that coconut trees generally get sold as coco lumber because they become senile and no longer produce.
Justin
I have no idea so I asked the wife and she said in the families farm they grow to 80 – 90 years and still bear good fruit however, there may be trees that don't and they have to be cut down and replaced. I assume the family knows what they are doing and looks out for this and replants on a schedule and hopefully does not take it for granted as the income is putting children and grandchildren through college. We only planted on our land in the past couple of years and still have 5 or so more years until we bear fruit and I guess be putting generations of our own kids to school I hope.
Hi Bob,
I just want to comment on Steven's business evaluation on copra business… Is palm oil production better than coconut? Malaysia and Indonesia are world's leading palm oil producers. I am not an expert on this but I have friends who are looking into pushing palm oil production in Mindanao specifically in Sultan Kudarat province. They pass by our place here in LA on their way to Costa Rica to look into partnering with a company that has better seedlings. Ever considered palm oil?
Gerry
Hi Bob i really enjoyed reading your site. on our holiday to philippines hopefully we can visit Davao and meet you in person, im enterested to know more about ideas on business.. i have my own business here in canada, i have my travel Agency, well i can talk to you more in person… when we meet…
Bob, I like your site and enjoy your comments. I would like to live in the philippines, but would like to find someway to make a living! My wife has ideals, but I'am not the typ of person to jump befor I look…If buying the book"49 ways to make a living" I'll buy the book rightaway, buy I don't like scams, your comment would be very pleaseing…Thanks J.C.
Hi Bob,
i am an Austrian, i and my wife (half Filipina) want to start a live in the philippines (and we think about franchise). So can you please send me the e-mail adress for Mr. Kotik so that i can asked him some questions? Because its for me easyer to write in German 🙂
Sorry for my bad english.
Hi Markus Schlenz – In my article, at the first line, there is a link to Rudolf's website. If you click there, he has a "Contact Us" link on his website.
Thank you Bob i also write a mail to Mr. Kotik
Hi Bob, thanks for putting my visit to you on your blog and find it funny how it developed to Zimbabwe and Copra….
See you next time again, my next schedule is May 18 to 20 … have a good one in the meantime and regards to Feyma …
RK
Hi Rudolf – Kumusta? Yeah, one thing about LiP – you just never know where the discussion will lead!
See you next month!