Closing a Business after Covid-19, rebounding with real estate
Investor · New Albany, IN · Member since 2017 · 99 posts · 42 votes
Closing a Business after Covid-19, rebounding with real estate
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Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
6yOriginally posted by @Natalie Allen:
Hi BP! Here is my current situation & I’m sure I’m not alone-
My daytime business travels to child care sites & provides ‘hands-on’ physical education programming. With the current state of the country, this is simply not an attractive business to schools & my current clients are barely keeping their heads above water. Instead of reacting out of fear, I’ve decided to close this business & take the slim amount of capital I had left to tackle & sales skills to new real estate projects. I’ve been wholesaling for a few years on & off (more as a supplement to my income) & have previously owned rentals. I’d like to take on a flip but without my consistent income, I’m unsure if I can get financing.
What would a pro do next?
-I know I’ll need more capital (currently willing to part with about $5k, leaving the rest in reserves to cover my personal expenses, but I know that’s not enough).
On the business front, have you thought about taking your business online? There are lots of parents who could and will use your services in providing Phys ed for their kids at home right now especially if this continues to be a problem in the Fall. Many people have transitioned to this model and are doing extremely well. Also you do not have to rely on current clientele since you can take the business anywhere in the world when you go online.
For the real estate business - You will not be able to get financing without income unless you have significant assets. You will also have to put 25-30% down right now and also cover carrying costs so if your cash reserves are tight I would not recommend borrowing Monet form a bank or hard money lender. You could do owner financing or find a private lender to fund the project. Other option would be to keep wholesaling and build your cash reserves so you are in a better position to borrow money.
6 Replies
- 6yCameron TopePro MemberProperty Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
Hey Natalie,
I'm sorry to hear about your business and you're right - you're not alone!
If I was in your shoes, I would first go get a well-paying full-time job then determine what you want out of real estate - your real estate goals.
Once you do that, start networking on the nights and weekends to find someone doing what you want to be doing. Ask folks if that person is legit, then ask him/her how you can add value to them and their business.
You'll have a job so you'll qualify for great financing and you won't be desperate. Plus, you'll be learning from someone doing what you want to be doing.
Hope that helps!
- Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes6y
Originally posted by @Natalie Allen:
Hi BP! Here is my current situation & I’m sure I’m not alone- My daytime business travels to child care sites & provides ‘hands-on’ physical education programming. With the current state of the country, this is simply not an attractive business to schools & my current clients are barely keeping their heads above water. Instead of reacting out of fear, I’ve decided to close this business & take the slim amount of capital I had left to tackle & sales skills to new real estate projects. I’ve been wholesaling for a few years on & off (more as a supplement to my income) & have previously owned rentals. I’d like to take on a flip but without my consistent income, I’m unsure if I can get financing. What would a pro do next? -I know I’ll need more capital (currently willing to part with about $5k, leaving the rest in reserves to cover my personal expenses, but I know that’s not enough).On the business front, have you thought about taking your business online? There are lots of parents who could and will use your services in providing Phys ed for their kids at home right now especially if this continues to be a problem in the Fall. Many people have transitioned to this model and are doing extremely well. Also you do not have to rely on current clientele since you can take the business anywhere in the world when you go online.
For the real estate business - You will not be able to get financing without income unless you have significant assets. You will also have to put 25-30% down right now and also cover carrying costs so if your cash reserves are tight I would not recommend borrowing Monet form a bank or hard money lender. You could do owner financing or find a private lender to fund the project. Other option would be to keep wholesaling and build your cash reserves so you are in a better position to borrow money.
- Investor · New Albany, IN · Member since 2017 · 99 posts · 42 votes6y@Cameron Tope Thanks!!
- 6yJonathan GreeneBusiness MemberReal Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
Your best bet is to spend the time networking and making more connections in the wholesale and real estate field since you can't do that first flip on your own. You may find a JV partner or someone local who wants to work together to do something, but you want to take that process slow. Build the RE relationships and take your part-time knowledge to full-time status, but also do not count on it as an income coming soon. Maybe up the spend on wholesaling marketing if you've done well with it before or get licensed which is a good bridge to have as an investor and useful for friends, family, etc. as well as money.
- Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes6y
@Natalie Allen, agreed that your current situation is not an ideal one to be flipping on your own. Wholesaling can secure more money and keep you in the business and hopefully be a faster turn around to build you reserves. Another option would be to partner on a flip, but that may be challenging if you have not done full renovations before. When my wife and started out, we used a family member as a capital partner. We found the deal and managed the whole renovation, family member footed the financial burden. When we sold, we split profit 50/50. These were also about $100-150k projects, so everything was done in cash, so no guaranteeing a loan.
I do like Cameron's idea as well, sort of along the FIRE movement. Get the best paying job you can find, even if you hate it, to build your reserves and have access to financing.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes6y
Originally posted by @Greg Dickerson:
Originally posted by @Natalie Allen:
Hi BP! Here is my current situation & I’m sure I’m not alone- My daytime business travels to child care sites & provides ‘hands-on’ physical education programming. With the current state of the country, this is simply not an attractive business to schools & my current clients are barely keeping their heads above water. Instead of reacting out of fear, I’ve decided to close this business & take the slim amount of capital I had left to tackle & sales skills to new real estate projects. I’ve been wholesaling for a few years on & off (more as a supplement to my income) & have previously owned rentals. I’d like to take on a flip but without my consistent income, I’m unsure if I can get financing. What would a pro do next? -I know I’ll need more capital (currently willing to part with about $5k, leaving the rest in reserves to cover my personal expenses, but I know that’s not enough).On the business front, have you thought about taking your business online? There are lots of parents who could and will use your services in providing Phys ed for their kids at home right now especially if this continues to be a problem in the Fall. Many people have transitioned to this model and are doing extremely well. Also you do not have to rely on current clientele since you can take the business anywhere in the world when you go online.
For the real estate business - You will not be able to get financing without income unless you have significant assets. You will also have to put 25-30% down right now and also cover carrying costs so if your cash reserves are tight I would not recommend borrowing Monet form a bank or hard money lender. You could do owner financing or find a private lender to fund the project. Other option would be to keep wholesaling and build your cash reserves so you are in a better position to borrow money.
The online education idea was the first thing that popped in my head too. Now more than ever parents are concerned about their children educational needs. There are many affluent people looking to help their children, so there is a huge market for this right now. The best part is you never leave your home and your customer can be anywhere in the country. You can load back to back sessions.
As far as real estate, with only $5000 it is tough to do any investing. You could become a real estate agent and work your way into investing from there.
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