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Should I sell my home to buy a business and reduce debt

Discussion in 'Financial Planning' started by jacksback, 7th Jul, 2010.

  1. jacksback

    jacksback New Member

    Joined:
    7th Jul, 2010
    Posts:
    3
    Location:
    Brisbane Qld
    I am contemplating selling my family home to buy a business that my husband would run, basically buying him a job doing what he does now but with a better return, and paying out all other debt. We would then rent and save. We would be able to save around 6K a month doing this and I figure with what we have left over from the sale of the house and the extra income it would be worth shedding our debt. I have also thought that we could continue to rent and buy and IP as soon as we had a deposit that was high enough to ensure we could be cash positive on the IP. Does anyone have any advice on this strategy?
     
  2. Jacque

    Jacque Team InvestEd

    Joined:
    16th Jun, 2005
    Posts:
    1,885
    Location:
    Sydney
    Hi Jack

    Selling your PPOR to put the profit into a business can be risky, but then again going into any business can be, as I'm sure you already know! Just make sure you've done your due diligence completely and are assured that it's going to be a worthwhile change. Running and owning a business is certainly not the same as working for someone else and believe me when I tell you that it's hard yakka when you're the boss and the master of your own destiny :D

    The benefit of selling your PPOR is that it's a tax free asset so a cheaper way to access funds than a business loan. However, the costs of renting (though usually cheaper than owning a mortgage) will generally outweigh here, so you need to consider all options.

    My advice would be to run all your numbers and different scenarios and set up a time to discuss with your accountant, if you haven't already done so.
    Best of luck
     
  3. anthonyh

    anthonyh New Member

    Joined:
    13th Sep, 2010
    Posts:
    1
    Location:
    Sydney
    I think you try to sell your house and pay off your dues and buy a business. You may get a good price of your house and might be the possibility that after paying your debt you might get surplus amount to own a new business.
     
  4. Ahmoh

    Ahmoh Member

    Joined:
    20th Apr, 2010
    Posts:
    11
    Location:
    Sunnybank, Brisbane, Qld
    Hi J,

    Have you thought about other alternatives to raise fund, such as home equity loan? The loan for business purpose is tax deductible. Like Jacque said, talk to your financial planner or accountant about different options and strategies.

    I believe owning a home vs renting is a personal choice. (assuming there is no financial issue). Renting is generally cheaper but you would lose on the capital appreciation of own home.

    What about your personal feeling? What is the personal value you place on the house? Do you like renting?

    The personal side could be as important as $ and c.