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2 Replies Last post: Jul 30, 2010 3:27 PM by TheSoloGuide

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Starting

Jul 30, 2010 12:37 PM

Start-up

RoXiE_G 1 posts since
Jul 30, 2010

My questions are:

How do I go about getting financing to purchase real estate to begin my business? Below is a brief summary of my idea...any input would be greatly appreciated.

I recently got married and during my venue search I realized that there are VERY few event facilites and even fewer with water features. I decided that it would be a great business venture to purchase a few acres of river frontage property and create a rentalble venue. During my research for my own wedding I found that each venue charged a minimum of approximately $3000 for an event and all that included was use of the facility, tables and chairs. After running the numbers, I believe this business is doable, but I need upfront financing to purchase the property and get it event ready, with landscaping, electricity, irrigation, and 2 small dressing quarters/restrooms.

As far as funds, I recently purchased my first home and have very good credit, but not much cash upfront to put toward purchasing a property.

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Mogul

FinanceOne 24 posts since
Jul 21, 2010

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1. Re: Starting Jul 30, 2010 2:46 PM

Roxie,

For this type of property you are going to need a minimum of 30% down and be able to fully qualify for the mortgage along with all your other debts. Raw land can be quite difficult financing for. It isn't likely that any bank will finance the land purchase and the development costs. You will have to break it down into stages. Putting together a viable business plan and networking with your friends and family for small investors would be a good place to start.

There is a lot of research to do before considering this type of land purchase and business venture. You must review zoning ordinances to see if this type of business is permitted and if it isn't you will have to file for a variance. Restrooms for large events near a river will require public water/sewer. That is another consideration. Shopping your competition and putting together a marketing and advertising strategy is also important.

SBA loans may be an option but they do require quite a bit of documentation and you will be required to inject 30% of the total project cost from your own resources. To apply for an SBA loan you will need a solid business plan along with cash-flow projections that show that the business can support the debt burden. You can visit the SBA's website and review the 7(a) program guidelines.

Hope this helps!

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Mogul

TheSoloGuide 362 posts since
Jul 7, 2009

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2. Re: Starting Jul 30, 2010 3:52 PM

RoXiE_G:

If you haven't already, you will need to create a formal business plan. Although you may just be using the money to purchase the property, it is or the purpose of creating a business. A lender will likely want to see once you've purchased the property what you plan to do with it.

Even if they don't want to see it, it is in your best interest to have a clear plan of how you can move forward with launching your business once you have the property.

For lending purposes, I recommend that you try and connect with a community member here that goes by the nickname "phanio". He is excellent with finance - education on how to break down a loan into its various purposes and sources for finding those funds. His site, Business Money Today is very helpful, too.

I hope this helps.

Doug Dolan

Small Biz Break (http://smallbizbreak.com)

"Simple, Spontaneous, Success"

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