Out of work, have equity, looking to invest or start business

[tangaroa]

Hi all,

Firstly thanks to all the excellent posters on this forum for providing such great info, it is very useful for people like me who don't know too much about investing...

I am wondering if i could get some tips for my financial situation. Details are:

1. Out of work since mid March - victim of the downturn in mining industry - was on a good salary (140k). Currently working on renovations on PPOR and investigating starting a small business, so no income likely in the immediate future.
2. PPOR: bought 11 years ago, owe bank 390k (will be 400k after renos finished), last valued at 590k. When i finish current renovations, should be valued at 700k.
3. Currently have a mortgage set up similar to line of credit, which gives me access to equity of 80% of last valuation, therefore currently 470k. This should go up to ~550k (80% of 700k) in a few months when renos are finished and new valuation is done.
4. Wife gets intermittent income from overseas, but its not anything significant and not enough to show to a bank as regular income.
5. No other savings, just living basic at the moment trying not to take too much from the loan.

I am considering a couple of options:

A. starting a business, but it would require ~200k investment, possibly more. Haven't started considering business partners yet but its a possibility.

B. Investing in an IP, and renovating/developing then selling.

What are my options for getting finance for either of the above given I have no current income?

thanks.

 

[Terry_w]

Extremely difficult I am afraid.

 

[joanmc]

I don't think the bank will let you increase your LOC when you have no income, so that might severely impact on your plans. Possibly look for a cheaper business to set up, maybe lawn mowing?

 

[Aaron_C]

200k investment is possible to borrow for business purposes if you are purchasing equipment for the business and/or an franchise. Key is a business plan. Expect to pay a lot in rates for it, though, on both the goodwill loan and also the mortgage on your property (which they can do).

 

[tangaroa]

Thanks for the feedback guys. That's what i was afraid of. Perhaps its time to just put the business dream on the backburner for now and get another job.

On the other hand... Aaron, yes there would be a thorough business plan and the upfront costs are for fitout/equipment etc. Once the business plan is in place, should I approach my bank, or any other bank offering business loans?

 

[Aaron_C]

On the other hand... Aaron, yes there would be a thorough business plan and the upfront costs are for fitout/equipment etc. Once the business plan is in place, should I approach my bank, or any other bank offering business loans?

Unless it is a franchise on their 'panel' - the banks won't lend on goodwill. Which bank are you with?

 

[tangaroa]

Unless it is a franchise on their 'panel' - the banks won't lend on goodwill. Which bank are you with?

Bank of Qld.

It is not a franchise.

Looking like i will only have the 70k I currently have access to in the LOC. So i will need to find some private partners.

 

[Aaron_C]

Bank of Qld.

It is not a franchise.

Looking like i will only have the 70k I currently have access to in the LOC. So i will need to find some private partners.

If it is equipment you can get finance for it.

 

[underdev]

Hi all,

Firstly thanks to all the excellent posters on this forum for providing such great info, it is very useful for people like me who don't know too much about investing...

I am wondering if i could get some tips for my financial situation. Details are:

1. Out of work since mid March - victim of the downturn in mining industry - was on a good salary (140k). Currently working on renovations on PPOR and investigating starting a small business, so no income likely in the immediate future.
2. PPOR: bought 11 years ago, owe bank 390k (will be 400k after renos finished), last valued at 590k. When i finish current renovations, should be valued at 700k.
3. Currently have a mortgage set up similar to line of credit, which gives me access to equity of 80% of last valuation, therefore currently 470k. This should go up to ~550k (80% of 700k) in a few months when renos are finished and new valuation is done.
4. Wife gets intermittent income from overseas, but its not anything significant and not enough to show to a bank as regular income.
5. No other savings, just living basic at the moment trying not to take too much from the loan.

I am considering a couple of options:

A. starting a business, but it would require ~200k investment, possibly more. Haven't started considering business partners yet but its a possibility.

B. Investing in an IP, and renovating/developing then selling.

What are my options for getting finance for either of the above given I have no current income?

thanks.

Have you had a business before? if not perhaps you should do as joanmc suggested and start a lawn mowing round to see if you like customers calling and expecting you to answer at 7am in the morning and on weekends, wasting time on quotes for people who never really intend to give you the work, Customers expecting the world in return for little pay, BOOKKEEPING / Collecting and paying GST for the ATO!!, trying to understand complex tax laws and may god help you if you want to employ someone (complicated).

IMO 200k is allot to risk on a business, there are waaay too many small business owners loosing their family homes at the moment.

Can you start the business small and build it up? That way any mistake you make won't have such a significant impact on your personal finances. Also you will develop a loyal customer base while your business is low cost.