Jewish World Review Jan. 15, 2001 / 20 Teves, 5761
Advice on buying a business
DEAR BRUCE: I'm going to buy a business and would like to consider several different types.
Are there reliable firms that I can work with to show me how to put together a financial package and how to evaluate the buy? I have some capital but would like to use as little of my money as possible. -- G.G., Rochester, N.Y.
DEAR G.G.: All of us try to put deals together and use as little of our money in the deal as possible. Having said that, if you were going to be looking for someone to carry paper for you, they are going to want a decent amount of money on your side to keep your interest even when things aren't going so well. It would seem to me that you might want to consider one or two different enterprises that you really have an interest in.
Going into business and having that desire is one thing, but to attack it with "I just want to be in business, and there are a lot of things that I can do" in my opinion is not the appropriate way. I would focus on something that you really believe you can do well and is available to you. Good owners go looking for a specific enterprise or two.
That isn't to say you shouldn't look in the "for sale" section; you might find something that never occurred to you. But on balance, you should be shooting in a very narrow direction.
DEAR BRUCE: I have about $400,000 equity in my home. I can refinance it but couldn't afford the payments. If I were to invest this $400,000, is there a way that I could do it so that I would get money from the investment? -- J.O., via e-mail
DEAR J.O.: If you are working that tight, I am not very comfortable with you borrowing that large a sum of money. You could, however, take a small portion of that money and in a separate account put one year's payments and pay out of that account. It would draw a little bit of interest, but the money would be there, and it would give you a year of payment room.
At the end of 12 months, you would then look to your investments and sell enough of the shares, if it was a mutual fund, for example, to give you another 12 months to build up that account again for the next 12-month period.
DEAR BRUCE: I'm 60 and have just retired. I own a vacation home on Lake Tahoe. I bought it for $135,000 and have been told by several knowledgeable people that I could sell it between $380,000 and $400,000. I currently owe about $83,000 on this property. I could pay it off right now with the sale of my current home, but I will get kicked very hard for capital gains. Can you suggest something? -- L.H., via e-mail
DEAR L.H.: Why not make the vacation property your current address? Vote from there, get your drivers license from there, register your car from that address. In short, make it very clear that this is now your private residence. Live there for two years; you could then sell it and have no tax whatever. This is an incredible bargain. You can sell your residence and keep $250,000 for one person, $500,000 per couple. If you need the money desperately, this should be saving you $50,000 or
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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12/22/00: Most work-at-home offers cater to fools; trust deed investments
12/20/00: Your son needs tough love
12/18/00: Time to move on
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11/23/00: Rent our house or sell it?
11/21/00: Fixed or adjustable rate?
11/20/00: Debt consolidation requires discipline
11/16/00: Ten-year fixed-rate mortgages
11/15/00: Higher interest means higher risk
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11/09/00: At 21, save for today and tomorrow
11/08/00: Can I shelter my severance pay?
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10/04/00: Put part of windfall in a Roth
10/03/00: Not paying taxes on interest from house sale
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09/27/00: Refinancing home without alerting crooks
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09/11/00: Must I pay for my gifted child's college tuition?
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08/28/00: When the insurance company has an 'out'
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08/16/00: IRAs for people with pensions
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08/11/00: Her shopping will ruin us
Yes, a contract means something
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08/04/00: Time to take on the airlines
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07/28/00: Hold onto a mortgage under 7 percent
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07/25/00: Negotiate with your neighbor
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06/27/00: Waiting before re-establishing credit
06/21/00: Insuring an older car
06/19/00: Take the money and run!
06/16/00: Utility company incursion
06/15/00: Insurance settlement is no bargain
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06/01/00: The truth about nursing home insurance
05/30/00: Keep mother-daughter loan simple
05/25/00: CDs for security, not investment
05/24/00: Battling with collection agency
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05/15/00: House is 'worth' what's offered
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05/11/00: Your heirs, your choice
05/09/00: Mutual-fund investigations
05/05/00: Credit cards vs. debit cards
05/04/00: Lawyer are good for something
05/03/00: The binding nature of contracts
05/02/00: You know you are in trouble when ...
05/01/00: Can primary residence be rented out?
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04/25/00: Get a homeowner's title policy!
04/24/00: Beware of errors in your favor
04/18/00: $10,000 limit on gifts
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04/11/00: Six percent is a pittance
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04/06/00: Get genetic screening for Tay-Sachs
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03/29/00: Pre-tax dollars in IRA taxed later
03/27/00: Gambling on business ventures
03/22/00: Old cars as hobby, not investment
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03/16/00: How to buy government bonds
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03/08/00: Real-estate lawyers are essential
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03/01/00: Is time-sharing a scam?
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02/28/00: Rely on a real-estate lawyer
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02/14/00: Shaky partnership buying house
02/11/00: Protection by residential zoning
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02/07/00: Ensure your insurability
02/04/00: Absurd community zoning laws
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02/01/00: Can we KO a custodian?
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01/26/00: Everyone needs a will
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01/14/00: Don't be a spendthrift!
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12/29/99: Warranty rip-offs
12/27/99: Checking up on investment handlers
12/23/99: Options good only when company's strong
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11/29/99: Mortgage strategy A-OK
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08/02/99: Get the survey BEFORE you buy the house!
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