Advice on a Personal or Small Business Loan to Scale business

[Amber Walker]

Hi Everyone,

I'm currently considering taking out a Personal Loan or a Small Business Loan to further scale my wholesaling business.  

Back Story:   I've successfully wholesaled 4 properties in the last couple of months (6-7months) averaging just over $6,000 assignment fee per deal. I've currently been a student full-time as I started wholesaling so I haven't had income besides student loans. I'll graduate this May and I'm looking to wholesale full-time. Financially, I have basically broke-even by using my wholesale profits as my supplemental income for all my living expenses and repairing my credit. I do am working from home but there isn't space for a legitimate office/desk area to stay organized especially with wanting to expand in productivity. 

So I'm wondering if it is a smart decision to pursue a small loan of $10,000 or less ($10,000 can cover 3 months of all my expenses) to be able to triple my marketing and investing in systems to further establish my business. My thinking is that if I can triple/quadruple my marketing I will generate a higher % of potential leads and deals coming in consistently. As of now, will no major marketing funds available, I'll continue to average my same response rate that by the time getting a good deal and closing my expenses eat away at my profit leaving very little for investing back into the business and marketing. 

Anyone's advice and/or experience would be greatly appreciated!! Thanks

[Adrien C.]

I wouldn't recommend that and based on your remarks about your credit and limited number of closed deals, you may find it hard to qualify. I don't recommend it because your business is not at a point of success to absorb the risk of having debt. I started with no outside money in November 2015 and have closed 13 properties in those 5 months. I bust my A off to find the cheap leads- driving mostly to start. I started with a small mailing of 300 in a specific area and got a deal from that. Every time I get a deal, I pay myself so I can survive and the rest stays in the business. I partner with local investors who can fund deals so I am able to close on them and get more than just an assignment fee. It takes work and is frustrating at times but I have no debt and I'm not pressured to make a deal out of something when it's not there. In my opinion, debt should not be used for living expenses. It should be used to make more money. What happens if you don't close a deal in 2-3 months? You've used up your loan on living expenses and are back where you are today except with a big loan you have to repay. If you graduate in May, go get a temporary job/career in your field and use that income to pay your bills. In your time not working that job- put it into wholesaling. You'll be much better at what you do if you don't have the stress of debt clouding your judgement on a property. Good luck