It’s an exciting time when your home business starts to take off. You planned well, budgeted correctly, and clearly, your marketing campaign was a success. But now you need to figure out whether the home you’re living in is big enough to sustain your business. Some entrepreneurs may opt to rearrange or renovate their homes to allow for business growth, while others may realize that purchasing a larger residence is their best bet. Here are some pointers from Tech Girl Financial for entrepreneurs looking to upsize for their at-home business.
Determine how much you are likely to get for the sale of your home.
Before you can proceed with home shopping, the first step is to figure out how much your present home is likely to go for on the existing market. You should also assess how long a sale is likely to take and whether or not it will be possible for you to keep running your business in your home during that time. One way to figure out your home’s value is to use an online tool for home appraisals or estimates. Another is to consult a realtor. Don’t forget to factor in the expense of selling your home, too.
Find out how much you will be able to take out in a mortgage.
The amount you will be eligible for depends on an array of factors, including income, existing debt, and your credit score. If you have excessive outstanding debt, try to reduce it before applying for a mortgage. Getting rid of debt will help you qualify for a larger loan; it will also make you more financially secure. As well as considering how much you are likely to qualify for, take into consideration the question of how much would be prudent to take out.
Decide on a budget.
Once you have an idea of what you will get from selling your home and the amount of your mortgage, go ahead and set a budget for your upsizing project. Decide how much you can afford as a down payment and what is reasonable to pay monthly. Make sure you include in your budget all the unforeseen and hidden costs of both selling and buying property, as well as moving expenses. Of course, factor in all the other expenses of both your personal life and maintaining your business.
Figure out exactly what you need in a new house.
Since you are moving for specific reasons pertaining to your personal and work needs, you need to find a property that will fit these needs. Make a list of everything that is non-negotiable in your new purchase, and then add to that a list of attributes that are desirable but not deal-breakers. You should consider factors such as plumbing and electricity, parking area, ease of entry, and whether you can accommodate a dedicated workspace.
Survey the housing market.
If your business is not confined to specific geographic parameters, consider whether relocating to a less expensive area might open up more opportunities for you. Checking out the national housing market can give you a sense of which areas might be good to invest in, property-wise. Also, do comparisons of area neighborhoods to see which are more affordable. However, you do not want to sacrifice safety and access to amenities for the sake of a lower price.
Evaluate whether you need to make your business a legal entity.
If you have not yet made your business official, you may want to do so before moving. Registering your company as a limited liability company is a popular choice for many home business owners because of the additional liability protection it offers. Another benefit of being an LLC is the savings and decreased paperwork at tax time. Business owners who are uncertain how to register their company can hire a formation service to do it for them. This can be especially helpful if you’re uncertain about the laws governing LLCs in California.
If you anticipate growing your business even more in the future, upsizing sooner rather than later can save you some hassle in the long run. Talk to a realtor and do your research before moving forward. For further assistance in making financial decisions, see what you can expect when you work with Tech Girl Financial.
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment advisory services offered through Cambridge Investment Research Advisors Inc., a Registered Investment Advisor. TechGirl Financial™ and Cambridge Investment Research, Inc., are not affiliated companies.