Closing a Business after Covid-19, rebounding with real estate

[Natalie Allen]

Hi BP! Here is my current situation & I’m sure I’m not alone- My daytime business travels to child care sites & provides ‘hands-on’ physical education programming. With the current state of the country, this is simply not an attractive business to schools & my current clients are barely keeping their heads above water. Instead of reacting out of fear, I’ve decided to close this business & take the slim amount of capital I had left to tackle & sales skills to new real estate projects. I’ve been wholesaling for a few years on & off (more as a supplement to my income) & have previously owned rentals. I’d like to take on a flip but without my consistent income, I’m unsure if I can get financing. What would a pro do next? -I know I’ll need more capital (currently willing to part with about $5k, leaving the rest in reserves to cover my personal expenses, but I know that’s not enough).

[Greg Dickerson]

Originally posted by @Natalie Allen:

Hi BP! Here is my current situation & I’m sure I’m not alone- My daytime business travels to child care sites & provides ‘hands-on’ physical education programming. With the current state of the country, this is simply not an attractive business to schools & my current clients are barely keeping their heads above water. Instead of reacting out of fear, I’ve decided to close this business & take the slim amount of capital I had left to tackle & sales skills to new real estate projects. I’ve been wholesaling for a few years on & off (more as a supplement to my income) & have previously owned rentals. I’d like to take on a flip but without my consistent income, I’m unsure if I can get financing. What would a pro do next? -I know I’ll need more capital (currently willing to part with about $5k, leaving the rest in reserves to cover my personal expenses, but I know that’s not enough).

On the business front, have you thought about taking your business online? There are lots of parents who could and will use your services in providing Phys ed for their kids at home right now especially if this continues to be a problem in the Fall. Many people have transitioned to this model and are doing extremely well. Also you do not have to rely on current clientele since you can take the business anywhere in the world when you go online. 

For the real estate business - You will not be able to get financing without income unless you have significant assets. You will also have to put 25-30% down right now and also cover carrying costs so if your cash reserves are tight I would not recommend borrowing Monet form a bank or hard money lender. You could do owner financing or find a private lender to fund the project. Other option would be to keep wholesaling and build your cash reserves so you are in a better position to borrow money.