Getting financing to rehab houses is harder now than before the crash, but can still be done. The preferred method to buying houses for rehab is cash or using an equity line of credit. This way if you are dealing with a motivated house you can close right away without the hassle of jumping through a lenders hoops. If this isn’t an option, you can find a private lender to fund your real estate deals. By offering friends, family, and anyone you know 8-10% interest you should be able to raise the money. You can set it up to defer payments to them until the rehab is complete and you sell the property. You will give them a first mortgage and personal promissory note in exchange for the money. This means they get the house if something goes wrong and can come after you personally.
A business owner must know how much cash flow is available on a daily basis. If you don’t know this you are heading for disaster. Because even if it seems to be a lot of cash coming in, you may very well have a lot of expenses that have crept in over the last few months. Every real business owner knows how much cash he has at all times. The business owner should look at his or her cash flow examples, Balance statement and Profit and Loss Statement weekly in most cases. Most business owners never do and then panic when things “all of a sudden” go haywire with the business.
Always use a contract between you and the contractor that has a hard date that the job must be complete. This must include a per diem penalty for everyday that the job is not done. This penalty amount will be subtracted from what you owe the contractor at pay day.
Develop a realistic revenue model that you can support through your operations and sales plan. If you have to build a manufacturing facility or even outsource manufacturing, it may take some time before your products are ready for sale. If you are selling into someone else’s manufactured product, understand how they buy. You may have to wait an entire cycle before you are able to sell them one product – that could be 18 months.
Please note that this factor or rule of thumb could be much higher, depending on the number of years of income you will have to replace. The highest “factor” I’ve seen is to multiply your annual after-tax income by 20.
He or she will be able to walk you through the various options. As with a financial planner, ask them how they’re compensated to keep them honest with the advice they’re giving you.
The flip side of accounts receivable. An increase in your accounts payable may merely reflect a larger amount of purchases overall. But an increase that hasn’t been planned or managed can be an internal warning that your company’s financial strength is waning.
This is almost certainly the most essential decision you have to take. To assist your selecting, think about that men and women are likely to visit bars close to exactly where they stay and just take a look to the competitors in your area. Start to feel about the menu: dependent on what you will provide you might have foods, drinks and cocktail menus.