If you are looking to sell a house to fund your business, you probably have questions cruising your mind. Below are several questions to ask before you sell your home to fund your startup and how important they are.
The idea behind selling your home for your business is to gather funds for your startup. Because of this reason, you will know how much your business needs. Knowing this value ensures that you accumulate the finances to sustain your business. In other words, if your business needs a million, yet your home is worth 200,000, you will still have a huge deficit. And for that reason, selling your house would not be a smart move.
Selling your house is as serious as going homeless. As such, you'll need to explore other options before taking this path. If your startup can flourish without selling your home — do it. Considering that, look at other alternatives of funding before selling your house. Tap into other ideas such as business loans, home equity, saving, or business partnership.
Most industrialists fall victim to the notion that starting a business automatically generates profit which goes to the entrepreneur. However, this is not the way corporations work. The profit generated from a company will sort out the liabilities before the entrepreneur gets his share. If your net profit cannot sustain you, it would be foolish to sell a home to fund a business.
According to The Property Buying Company, the time it takes to sell a house depends on numerous factors. These include price, location, condition, and your property's value. If the aspects above are not favorable, it will take months to land a buyer. However, if they were suitable, you will likely land a buyer in 62 days or less. With that in mind, ensure your sale takes a short time to complete.
Selling a house is as simple as sending the title deed to the buyer and getting your money in return; it involves legal procedures, loads of paperwork. These procedures require funding and will take you 10% of your selling price. The 10% will go to agent fees, repairs, closing costs, and concession. So with that in mind, don't budget on your selling price; rather, expect 90% or less from the sale.
As an entrepreneur, you want to cut extra costs and funnel all your resources into the business. One compelling way to do this is trimming down on agent fees if you can. This, however, is not advised—especially if you are selling for the first time. Getting an agent from companies with cash offers for homes to oversee the transaction saves you from handling the paperwork, legal matters, and marketing. Hence worth it.
Before selling a house, consider how long it will take you to get a new one in return. If your net profit is enough to land a new home within a year or two—proceed with the sale. However, if the business will take time to boom, look for other alternatives of funding.
If you decide to sell your house to start a business, chances are you'll either succeed or fail. Having a contingency plan acts as a cushion in case your business fails. You'll still need a place to live after you've made the sacrifice. If you have a contingency plan, things will be easier. Even if your business were to be a success, it would need time before it succeeds. And for that reason, you'll need a contingency plan to make things easier.
Like every other commodity, houses are also affected by demand in the market. If the demand is greater than the number of homes, you'll likely land more cash. Inversely, if the demand is lower, you'll probably sell for less. With that in mind, sell your house when the demand is higher; it'll get you more money for the business.
Saving the best for last is the question where will I live? Once you sell your home, you need another! As a result, it's paramount to find a place, either a rental or your parent's home. If you are looking to make the sale, find a place earlier before selling. Otherwise, you'll be out in the street.