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Funding a business is hard, ask anyone who is in it. Whether it’s starting one, or thinking about expanding an existing one, the biggest headache will almost always be financed. The problem usually starts with convincing someone to buy into your dream, assuring them it is worth investing in and that it will bring a good return on their investment. To make it even harder, an investor will ask for a portion of your venture in exchange. So why don’t we come closer to home?
Among the few financial options that you are left with, you quickly realize that selling your house is the most viable one. Now before we rush into things and look for a realtor, here are a couple of things to consider.
How Fast Do You Need the Money?
Houses are tricky to sell. Compared to other assets like cars and equipment, which can be moved quickly, houses take a longer time to sell. Add to that the uncertainty of the property market and you might have a heart attack if the capital is needed fast.
Finding a buyer might not be the hardest part, but closing the deal is a process that can stretch on for weeks. If your business needs quick capital to expand or stay afloat, this might not be the best option. Consider other alternatives such as 24-hour fast loans.
How Much Money Do You Need?
This is the most important you need to ask yourself. How much you need to start from scratch, or help the business stay afloat, or expand it, should be the main determinant on whether you are going to sell your house. Knowing how much your property can fetch on the property market will also be important here.
If you need 10 million for your business and you know that your house can only fetch a quarter of this amount, the remaining figure is too big to be ignored. The main concept behind selling your house is for you to get enough cash to do whatever you want with your business and to remain with enough to sustain both yourself and your business.
The only way you will know how much your property is worth is by researching the current state of the housing market. This should go as far as consulting a specialist if you need to. Your property’s equity shouldn’t be taken so lightly, we don’t want you to be homeless or broke because of misinformation, so take care.
How will the Sale Affect Your Life?
Don’t be driven by profit and forget where you are going to lay your head at night. Most people might fall for the illusion but we hope that won’t be you. A house sale is going to have a very big impact on you and your family, hence adequate is needed here, don’t rush.
Can you afford to move? Moving in requires a security deposit on the property, first month’s rent, and paying for professional movers. Will you be downsizing? If yes, then you need to know the possible effect it might have on your family. Downsizing might affect your children’s education and social development if not handled properly, so proper communication should be key
Do You Have a Mortgage on the House?
How much do you still owe the bank in terms of mortgage? If it is a lot and is starting to become a problem, then you should consider selling the house. Done correctly this might mean you get to pay off the remaining amount with the proceeds of the sale. These proceeds can be used to take care of your accommodation and your ambitious venture.
The story easily goes the other way if you had completed your mortgage. Selling, in this case, means increasing your living expenses since that might translate to rent. Besides, purchasing another property in the future means you will be going to paying mortgages. A better idea in this case would be to take a second mortgage on your house to fund your business.
Is your business worth the risk?
Selling your house should be taken very seriously. This is especially if you are planning to invest the money in a new business or one that has been experiencing a slump. Businesses crash all the time. A crash means a significant loss of finances and in some cases an effect on your mental health.
A quick house sale might give you the cash you need but if the business has a minimal chance of success then it isn’t worth it. Ensure that your business is water-tight by the time you decide to inject capital into it. Try and pitch it to investors. If they can’t resist it then you know your idea is unique. If you are not confident that your business might pass a panel of investors then it’s better to look for another business.
The idea might seem scary at first but selling your house to fund your business is not a bad idea. This way your business can start without debt or expand to new horizons and make more profit. Remember you can always buy another house when the business becomes successful.
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