Financial Advice Needed

[abdecal]

So I've thought about this for quite some time and need a little advice...

I'm searching for the best route to dump financial obligations to pursue a business idea.

Here's the situation...

I'm 23 years old. I have a girlfriend but no kids. I bought a 3 bedroom 2 and a half bath house when I was 21 when I was dating a long term girlfriend at the time. I'm not much of a financial risk taker so when I bought the house I made sure if we broke up I could afford it on my own and I put it in only my name. Well... needless to say I did break up with her after I was cheated on and I kicked her out(happened a little over a year ago). Now I live in a pretty big house by myself that I don't need.

Obviously, I'm passionate about being an entrepreneur and I have a business idea that I will need to be financially flexible for and will probably require me to move out of Ohio within the next year or two.

Right now I have a steady good paying job that I somewhat enjoy and a business on the side that I can run from anywhere in the country until the new venture takes off. The way I see it is I only live once and this has been a life goal since I was 10 years old and I will do anything to achieve it. I only get one shot and will always regret it if I didn't take it.

The current girlfriend wants to move to Nashville, TN and wants me to go with her. Which ironically is probably the best city in the country for me to pursue the business (music related). I will not make any decisions that leaves me dependent on my relationship with her (like buying another house). I have to always cover my own ass because you just never know what can happen.

The house according to Zillow has about $40k in equity... but if we're being realistic it has more around $15k to $25k in equity. I have thought about selling it at what I owe and losing that equity to sell it quick. My time is more valuable to me. I do not have a home equity loan or any credit cards, I pay cash for everything. Only the car, motorcycle (to build credit I did payments), and house are debts. House and Motorcycle are both worth more than I owe. The car is not as it depreciates in value the fastest.

My other option is to rent the house but I really DO NOT want to deal with all of the hassles of being a landlord. At the same time it keeps the asset with the potential of making some money. (can also end up costing me money with bad renters)

I plan to keep working for a year and save up about $55k cash and live with my brother until I'm ready to make the leap. As far as how much of that will go to the business is minimal, at most $5k. The rest is to live off of to buy me time to pursue it.

I'm starting this business with two other guys one of which has multi-millionaire parents that are willing to invest in the business once we get it started. We all have the same way of thinking and the same dedication to the idea.

So my question is... What are my options? Do I sell or rent? What would you do in my shoes?

Also going to sell the bike for $3k. I'll still be riding but on a borrowed R6 lol Can't give that up, I enjoy it to much.

[Limenine9r]

I'd sell house and hope that you can get out without having to write a check to the new owner. I'm in this same Dayton area that is flooded with houses and nobody has job or income or cash to buy anything. .. My lil brother sold his house over in east Dayton about a yr ago - worked some kind of deal with buyer to where he would and did give them $10k so that they could buy his old house, he bought a repo house in Franklin but couldn't qualify for both mortgages.

[abdecal]

I'd sell house and hope that you can get out without having to write a check to the new owner. I'm in this same Dayton area that is flooded with houses and nobody has job or income or cash to buy anything. .. My lil brother sold his house over in east Dayton about a yr ago - worked some kind of deal with buyer to where he would and did give them $10k so that they could buy his old house, he bought a repo house in Franklin but couldn't qualify for both mortgages.

Other houses in the neighborhood have sold fast and only a little less than the Zillow estimate so I think it's possible. After realtor fees and such though I would imagine it's cutting it pretty close.

[Limenine9r]

My neighbor over in Clayton had transferred to Atlanta, couldn't find a buyer for her 2 story 4 bdrm with basement and inground pool. Messed with renters for about a yr. then it was foreclosed on and sat empty for close to yr. my new neighbors have bought it thru foreclosure at 20k under market value, but they are in process of replacing all carpet, countertops, and cabinets thanks to careless renters destroying the stuff.

[abdecal]

Yeah. Renters make me nervous

[Gixxus Christ!]

Hold onto the house until at least a year after the election, see what the economy and the market does. Renters are scary, but if you find the right one and set your price correctly you can have that mortgage paid plus enough to pay someone to manage the property. Maybe you have someone you trust to do that for you if you do move out of state? Trust is a dirty word in the rental world, even with you holding first month and security deposit you can easily be fucked if you rent to assholes. You can vet your potential renters with housing and employment references and that will lower your odds of being fucked. You can also write into your lease an interest rate for late rent. While this doesn't exactly guarantee prompt payment it does allow you swift commencement of eviction proceedings.

Bottom line: you have an asset that if conducted properly could at the minimum pay for itself for the term of the loan and beyond that turn a profit IF you can find a stable, decent respectable tenant to occupy it and secure reasonable out of state management.

[imaposer]

You don't want to be a long distant land lord, especially if you are going to be trying to start up a business elsewhere. If other houses in your area are selling relatively quickly at just a bit below zillow, price yours the same and use that to help pay off the bike and car. No need to flat out dump it to get rid of it unless you need to be gone right away.

I would try to have zero debt and a pile of cash when I moved to have as good of a chance at making a start up work.

[Disclaimer]

What would you do in my shoes?

Hookers and blow.

That's always been the answer on ORDN.

[jester3681]

You may want to look up a rental manager in your area - if you want to hold on to the house and rent it out, but don't want to deal with the hassle, they can do it for you - you're still financially responsible for the house, but they take care of the tenant and the rent collection. You won't be getting calls at 3 am when the hot water goes out, etc.

However, if you can sell the house and walk away with some cash or break even after the sale, I'd do it. Just my thoughts.

[magley64]

With the housing crash, everyone is looking for places to rent, recently sales have started to level off and even come up a little. There are still WAY more renters than buyers out there, so finding good tennants wouldn't be all that difficult.

my vote is rent it, wait for the market to rebound.

[MidgetTodd]

Turn the house into an in call escort service and hire a house mother to run it. Part of the house mothers comp package would be housing so your property is always supervised. The house cut would be slit 50/50 between you and the mother after bills are paid so the mother would have more incentive to make sure the girls performed. Of course as the owner you would also "interview" the girls and also perform their regular "evaluation".

Really the only option for a passionate business man such as yourself

[motozachl]

Burn it.

Collect Insurance

Profit

[redkow97]

Your friends' parents didn't become millionaires by investing in 23 yr olds who want to be in the music industry...

I would get their money in-hand before you do anything.

[20thGix]

I think the above posts have you covered for what to do with the house. As far the the new buisness partnership.....been there, done that and fuck that if you dont have to. I started a buisness with a long time friend 6-7 years ago and everything was great the first couple years. Then everthing fell apart. He became unreliable and basically destroyed all cutomer loyalty and trust that we had built. Toward the end of that 3rd year i had to tell him over the phone he was basically out of the equation from that point on. Couldnt even get a face to face with him over the situation. I havent seen or spoken to him since. To this day i still dont know what caused him to do what he did. Only thru a couple mutual friends that we have that asked him what happened was told his only reponse was "I fucked up".

So just be careful and make sure all your ducks are in a row before betting the farm on this future "partnership". If you can do this by yourself you will be much better off.

[JustBryan]

As others have said, partnerships have a bad way of destroying friendships quickly. At your age, your ideas of a successful business will change as time goes by, maybe not the same as your business partners. be careful there. And for the housing market...don't look for a quick rebound. It can never be what it once was. That was a big part of what happened to this economy. Good luck to you. Don't give up on your dreams.

[Simplysix]

I was in a very similar situation. Bought my 1st house at 22. Got a good job out of state 3 years later and had to decide what to do. Looked at selling but decided it wasn't worth the loss/break even so I started renting it. The first renters I had we're awesome. They had to do a 6 month lease while they were waiting for their house to finish being build, so I charged a short term lease fee. Second renters are there now and seem great. Army guy and wife and no kids.

I profit about $400/month from the rent payments and getti keep building the equity.

My vote: Keep it and find renters

[Helmutt]

You don't want to be a long distant land lord, especially if you are going to be trying to start up a business elsewhere. If other houses in your area are selling relatively quickly at just a bit below zillow, price yours the same and use that to help pay off the bike and car. No need to flat out dump it to get rid of it unless you need to be gone right away.

I would try to have zero debt and a pile of cash when I moved to have as good of a chance at making a start up work.

This is the route I'd go. Sell the house, pay the debts, move to where ever it is you plan to, and start over. You're young, so move around while your roots are short!

[jester3681]

I profit about $400/month from the rent payments and getti keep building the equity.

Lucky fucker...

[conn-e-rot]

The fact that you asked for financial advise on this forum shows poor financial sense

[abdecal]

Your friends' parents didn't become millionaires by investing in 23 yr olds who want to be in the music industry...

I would get their money in-hand before you do anything.

It's music related. Not the same as being in the music industry. The music industry is brutal.

But I'm not concerned about them not investing. They have already given a substantial amount and they're just as excited about it as we are.

And I'm not your typical 23 year old. I've been making money off businesses I started since I was 10 years old.

[Disclaimer]

The fact that you asked for financial advise on this forum shows poor financial sense

Truer words have never been spoken.

[abdecal]

The fact that you asked for financial advise on this forum shows poor financial sense

I don't think so. The guys on here have experience that I don't have yet and many have given great advice already. I find when I've hit a road block on what I should do it's best to ask someone or a group of people who have been there before. Why make all the mistakes and learn the hard way when you can learn from someone elses successes or failures before you make a decision?

[MidgetTodd]

Truer words have never been spoken.

Wrong, my advice was solid

[abdecal]

Wrong, my advice was solid

hahaha. I agree

[Disclaimer]

Ok, except for MT's advice.

In fact, everything MT says should probably be heeded as 'life gospel'. In MT we trust.

I'm not knocking your approach -- "ask others' with experience" is a great tactic and will get you far, so you're mature enough to realize what you don't know and humble enough to ask for advice. Good.

The point is, and I know I'm being presumptuous here, how many people on an Ohio Motorcycle site do you think you'll get good advice from? You'll get advice... but the caliber and quality is all over the board, just realize that if you take others' advice from here (that aren't MT) and you crash and burn. It's really about how well you vet the advice right? And if you're vetting peoples' advice anyway, you'll already be doing research on other sites way more applicable to your financial conundrum than here. The best you'll be able to get here is someone elses' experiences that may or may not apply to you.

If your excuse for why something ever failed is "Well, these guys on the internet motorcycle site I frequent said it was a good idea" -- then you have some introspection to be doing...preferably while nose deep in blow off a hookers' ass.

Edited October 24, 2012 by JRMMiii