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To buy a business using cash or buy after I borrow from the bank.?
If I had 1 million dollars in property (owing 80,000 to the bank for one only) and I wanted to buy a business for 800,000.
Should I borrow 800,000 to buy this business or sell my property first, pay out that last lone and then buy the business using the cash?
2 Answers
- LimoPilotLv 41 decade agoFavourite answer
My opinion is that you get a loan protected by an LLC. for the 800k
THis protects you and the investment that you already have.
If the business goes under the initial investment is protected and under an LLC so are you.
- 1 decade ago
If you can get the bank loan you might want to take it.
Say the bank makes you put up 100,000 of your own money. Lets say you are astute enough to make a profit in this market (although somehow not enough to figure this question out), the profit will give you a much higher ROI from the debt, plus the interest can act as a tax shield.
Profit $5,000
Investment with loan: 5000/100,000 = 5% ROI
Investment without: 5000/800000 = 0.00625% ROI
of course if you cant pay your interest you lose both...