You have a decent stash of cash, but you’re split between buying a house and starting a business.
First of all, that’s a nice problem to have. In an economy where 63 percent of aspiring entrepreneurs lack startup capital and many people rely on mortgages to finance their home purchases, you’re among the lucky few.
Back to your dilemma, truth is both options make financial sense. But each has its upsides and drawbacks.
This handy guide will help you decide whether to buy a house or dive into entrepreneurship.
How Much Money Do You Have?
Homes come in all shapes and sizes, and their prices vary. You can spend as little as $10,000 on a tiny house or splash about $200K (median home price in the U.S.) on a modest 3-bedroom bungalow.
Startup capital also varies from business to business. A microbusiness will cost you as little as $3,000 to start while a tech startup can swallow north of $30K.
As such, the first thing to look at is the amount of money at your disposal. Is it equal to the median home price in your area? If not, you’re probably not ready to purchase a home.
Do You Have a Passion for Entrepreneurship?
It takes much more than access to capital to start and run a successful business. You need to be a passionate entrepreneur as well.
If you love reading about entrepreneurship, fancy taking risks and dream about being your own boss, then you’re better off spending your money on starting a business.
But before you do that, ensure you have a viable idea and a solid business plan. Establish whether the money is enough to keep the business running until it’s turning a profit. Inadequate cash flow is one of the reasons many businesses fail.
Buy a House If You Hate Uncertainty
Half of all new businesses don’t live past five years. So when you start a business, you already know the odds are stacked against you.
Is it worth your time and money taking such a gamble?
If you’ve no appetite for risk and uncertainty, by all means buy a house. Even if you don’t have enough money to buy the house of your dreams, sites like Needtosellmyhouse.com will help you sell you current home and raise the money you need to enter the market.
Keep in mind, homeownership has its risks, too.
If you purchase a property in a bad location, for example, its value will dip, and you’ll lose money when you sell it. Even if you have no intention to sell, you might need to secure a home equity loan, in which case you’ll qualify for a smaller amount.
Are You Chasing Financial Freedom?
We’ll want to be financially free. Travel the world. Buy whatever pleases the eye.
Of the two options, which is more likely to help you achieve financial freedom?
Homeownership is a beautiful thing. You’re free to decorate however you wish, keeps as many pets, and no one will come asking for rent. And, yes, your property’s value might increase, but you’ll be really fortunate to get double its current value in this lifetime.
On the other hand, entrepreneurship can make you very rich. As long as your idea is right and you’re willing to put in the work, you can build a business empire. Today’s billion-dollar companies were once small businesses with limited budgets.
Homeownership or Entrepreneurship? The Choice Is Yours
Ultimately, it’s you to decide whether you want to buy a house first or start a business. We’ve done our part, which is to give you the information you need to make a smart decision.
If you choose entrepreneurship, count on us to offer you the best business advice.