5 Questions to Ask If You Want to Sell Your Home to Fund Your Business
Need cash to fund your business? Ask yourself these 5 questions before tapping your home for money.
Whether your business is just barely staying afloat or starting to sink, you know one thing. You could really use some capital to help fund your business. You’ve considered your options and are tempted to sell your home to help fund your business. But is that a good idea?
Here are five questions to ask yourself if you’re thinking about selling your home for business capital.
1. How much money do you need?
The most obvious question is how much do you need? This is important because if you need a million dollars but your home is only worth $200,000, you’re still at a huge deficit. If you were to go this route you want to make sure it actually gets you what you need and hopefully more. The only way this is a good move is if it can keep your business afloat and doing well, without leaving you homeless.
2. How quickly do you need it?
Unlike other types of assets, a home is not something you can sell quickly. The process can take months and months. A house can sit on the market for a while. If the housing market begins to cool down, it’s even tougher for buyers who need capital fast. If you need cash now, selling your home is likely not the best option.
3. Have you explored all of your options?
Selling your home to fund your business isn’t something you should take lightly. First, consider if you’ve looked at all your other options. For example:
- Have you applied for a small business loan?
- Have you tapped any home equity?
- Do you have savings or investments you can cash in?
- Have you sold hard assets that you can part with?
You want to make sure you’ve given all other options a fair shot before deciding to sell your home.
4. Can you afford it?
If you’re thinking of selling your home to fund your business you might just be thinking about the profit and how to keep your business going. But you still need somewhere to live. Can you afford the rent in your area for a place that you want? Can you afford to move? Moving requires a security deposit, first month’s rent, and in some cases last month’s rent, too. That’s a lot of cash out of pocket.
On top of that, you have to pay moving costs. Whether you hire professional movers or not, there are always costs. You have moving boxes, a U-haul van, etc. It all adds up.
Before making a move, seriously consider the costs related to moving and make sure you can afford it.
5. How much money do you owe?
How much you owe on your mortgage can make a huge difference. If you feel mired in debt from your mortgage, selling your home and getting something more affordable may be your best bet. But if your home is paid off that’s another thing entirely. You have no monthly mortgage payments now, and you’ll be trading that to rent. You want to weigh the short-term and long-term consequences of moving, given your financial situation with your mortgage.
What to do
If you’ve been rejected for small business financing, your HELOC isn’t enough, and other options keep getting you to a dead-end, selling your house may seem like the best option. There’s just one issue — your home isn’t market ready and investing the money to make it so would defeat the purpose of trying to sell your home to fund your business.
You’re not without options, though. Here at Sundae we can help you sell your home as-is for the highest off-market price possible. We work with a large, vetted network of cash homebuyers and property investors who will bid on your home, and we’ll give you the option to pick the best offer. To make it even better, you may be eligible to receive up to $10,000 in cash advances to help you settle into a new place.
So if your decision is to sell your house to fund your business we may be able to help. Of course, you want to consider the questions above carefully and perhaps talk with a financial professional who can help you decide what’s best for you and your business.