Some of the best home-based business ideas spring from something you can do with ease and flair. When special occasions come around, do you end up thrilling and delighting your friends with your gift baskets? Personalized gift baskets that you can sell online or offer to individuals and companies is one of the interesting business ideas you can start at home. If you specialize in a certain area, like information technology, or culinary arts, or accounting, you may also start your own home-based consulting business. Or you may choose to be a health or life coach. If you’re great with kids, you can opt to invest on a child tutoring franchise and get the initial business tools, training and support you’d need. There are many other home-based business ideas that may be suited for you, some of them requiring minimal or no capital.Most home-based businesses thrive when committed people hone their business skills and pour time and effort into their ventures. It also pays to follow your passion or heart’s desire when pursuing a sound business idea, and later on see the profits roll in. There’s a lot of choices to choose from, including online sites presenting the top 10 home based business opportunities that have proven lucrative for many people. Check out these sites to see the various options or business possibilities that may let you earn some extra cash, or multiple income streams.Some good home-based business ideas that may strike you as really interesting are working as a personal chef for busy people; operating an espresso cart or snack center; teaching tai-chi or Pilates, running a home-based daycare center or cleaning service; selling your home-baked goodies or accessories, or pet-based products. There’s a ready market for any of these products and services. Across the world, people seek the oddest things, like a designer collar and tuxedo for a dog who’d be part of a wedding ensemble. If you’re a pet lover and you’ve decided to venture into selling unique dog accessories, you’d be able to identify with the various quirks and requirements of your target customers. The idea is to fill a need. With careful planning and research, some business sense, working capital, and a burning passion for something, you may have a real winner of a home business opportunity on your hands.
Home Based Business Versus a Corporate Gig, Why Choose?
Although there are glimmers of light with regards to the economic conditions that have caused financial hardship for so many, there still exists the need for most people to ‘make more money’ and find a way to do it while already holding down at least one full time job. Working in some existing corporate structure in the capacity of management, labor, or skilled trade, and balancing the demands of family, community, and life in general, the demand for earning more money is great but resources are few and far between when it comes to increasing one’s personal wealth. Let’s be honest, most individuals do not work a second, or third job, unless it depends on their survival, because the 24 hours in a day are packed with existing work and family demands, but far too many folks lie on the brink of losing their homes, deteriorating health, and emotional frustration due to the rising cost of living, and the decreased capability of their buying power, or plain cash in general.I submit that one of the best ways to add additional capital and income for anyone who is employed by any kind of corporate structure is to start and build a home based business. There are three key reasons why a home based business is more important than ever before and why you need to start one soon, or revive the one that is collecting dust:· Plan B: As long as you are employed by someone else, for all practical purposes you are employed as long as your services are deemed valuable; meaning you are helping to make money for the company or are perceived as adding value in some sort of way. The minute that you are ‘perceived’ as not contributing to the bottom line by whatever definition is given, you become expendable. This does not have to happen in a one off manner, but we have all heard about entire divisions, or even companies being terminated because they did not fit with the ‘strategic direction’ in which the company was moving. Regardless of loyalty, seniority, or even contribution, the economic conditions of this decade have been relentless in delivering pink slips to both knowing and unknowing individuals. Through May of 2012 there had been 6769 mass layoffs in the US (reported by the Bureau of Labor and Statistics). The definition of a mass layoff is when 50 people or more file unemployment due to efforts taken by an employer.On the flip side, sometimes peace of mind and your mental state are the driving forces to create separation from a toxic work environment. Keeping one’s sanity and emotional well-being intact may necessitate the separation from an employer. Passive or active separation is not the point; the point is that loss of income and in some cases benefits can be a gut wrenching experience that can only be made better by the replacement of lost income. Knowing that there is an alternative stream of income, like a home based business, that can be leveraged when a ‘traditional’ job goes away is the kind of peace of mind that truly is ‘priceless’.· Doing more with less is not sustainable: The days of surplus and bigger is better are over for many. Although we are forced in our corporate work environments to ‘do more with less’ translating that to home makes for additional stress and a feeling like we live to work, instead of living to do the kind of work we want. Inflation has decreased somewhat over the last year, but anyone who has gone grocery shopping, car shopping, or just to the movies can tell you that everything costs more money. Educational costs are up, medical costs are up, and it just seems as though it takes more money to do everything in life. Because employers can and have held salaries flat and in some cases decreased wages, the need for additional sources of revenue are great in order to make ends meet. Time is our greatest resource. It cannot be controlled, at least not today and the decisions that we make with the time that we have, has a direct correlation to our quality of life. Home based businesses give individuals the greatest degree of flexibility when it comes to earning additional revenue because of the flexibility to work the business around existing work and family demands. There is no sign of relief or regression when it comes to the cost of living; therefore increasing the household capacity for revenue is a responsibility that everyone must make. Managing the cost side of the equation is just as important, but you can only cut but so much. Unfortunately, even the best managed 401K, IRA, pension, savings program, investments, and Social Security (if it is around) may not be enough in and of itself to sustain you in old age (especially if a major illness occurs). A home based business can provide the necessary income, and in many cases a residual income that can mean the difference between living the good life in retirement and having to work the rest of your life.· The tax benefits cannot be ignored: It has been said that keeping more of the money that you make in your pocket is one of the most important keys to achieving financial success. To that end, far too many people do not take advantage of the tax benefits that a home based business can afford, thereby saving thousands of dollars each year on their tax bills. Deductions such as writing off mileage expense, writing off the cost of maintaining a home office, employing one’s children and/or spouse, buying new equipment, and setting up a self-employed retirement fund, just to name a few, are all potential money saving exemptions that a home based business could afford you come tax time. Major corporations spend millions, even billions of dollars each year retaining the best tax talent and resources to preserve as much of their earnings as possible, why not you? If done right with the proper advice and counsel, perfectly legal means can be taken each year to keep more of your hard earned money in your pocket. Mobile software used on your smart phone can make the process of tracking tax deductions very easy and efficient, not to mention making the tax filing experience a lot less painful. Taxes are inevitable, but leveraging a home based business can preserve your wealth and create a legitimate way to aid your financial freedom.Ultimately, having a corporate gig and a home based business is the best of both worlds, or at least until your home based business becomes successful enough that you can do it full time. You do have to be smart though with regards to drawing the line between your corporate work and your home based business. While on the clock and utilizing corporate assets, refrain from conducting work for your home based business and vice versa. There are way too many tools and resources to stay productive with your home based business during your corporate work hours to jeopardize a corporate gig and benefits by doing something stupid. Auto responders, virtual assistants, hands free devices leveraged during commute times, can give your home based business the look and feel of being full-time when you are not. The key to burning the candle at both ends is to give yourself options so that you can make decisions on your own time frame when you want. Empower yourself today with a home based business so that you can have financial freedom tomorrow to live the life you want and deserve.
Investing in Property – What Is the Best Way to Buy Rental Property?
Investing in Property
What is the best way to buy rental property?
The question you need to ask yourself is – Am I buying this property as an investment?
Now this sounds like a pretty stupid question, right? But in reality, many people (myself included) have made a purchase decision on the basis that they love the “property” not the “investment.”
What do I mean? Well you have to stop and ask yourself do I really love investing in property or do I just love to own property. Many have purchased an “investment property” on the basis that they “liked” it, rather than because they had calculated it would provide a great return.
When investing in property you should always run your numbers through a property investment calculator before deciding whether to even look at a property, let alone buy it!
My first CBD apartment – aka “Investing in Property for Fools!”
I’d always wanted to own a piece of the CBD. Growing up as a kid I loved visiting the “city” to look at the skyscrapers and imagined coming here for work like my Dad did each morning. Sure, I was investing in property. I was investing my emotional security in a property location! So you can see quite clearly that it was an emotional, rather than a hard headed decision to buy a newly complete one bedroom unit back in the early 2000s. It was just something I’d always wanted to “have.”
I remember driving around the inner city with a well known property spruiker looking at projects he was involved with. Of course his level of involvement was as a master salesman. A unit became available for approximately $230k. As a young couple my wife and I discussed the pros and cons and I decided against the advice of my wife that this might not be such a great idea.
At the same time another unit had become available in the inner city block of apartments that I was currently living in. It was available at a similar price. My wife counselled me to consider this as an option. My “adviser” had discouraged me on the basis that I would be putting all me eggs in one basket. There was some truth to this advice so I followed my “dream” of an apartment in the “city”.
When I went to the office to sign the papers I remember being advised that the original unit was no longer available, but a different one on a higher floor was, at a higher price! I said OK, No problem, like we Aussies tend to do. Then I was presented with the option to purchase a “furniture package” for an extra $20k. This would “guarantee” a rental return of 8% to me for the first 2 years of my investment. I hadn’t previously considered this, but of course I said “Yes”and was told what a wise choice I had made. (Of course this made me feel good about myself!)
The truth was I bought the unit not on the basis of its potential financial return but its immediate emotional return. I never did end up living in it or even spending a single night there, although I’d often wander past and gaze up at my balcony and wonder how “cool” it would be to live here.
In fact the property was a complete drain on my bank balance due to the high costs associated with the common areas including pool and gym equipment. The rent never paid for the outgoings and I lived in hope that the price would go up so I could make a “paper” profit at least!
Now some time later I did end up selling the unit for around $300k, so it was far from a complete disaster. In the end I was very glad to sell and call it even. In reality the cost to me was an opportunity cost. What else could I have been doing with my money?
I looked recently for sales data on the city block in question and found a similar unit sold for $355k, approx. 10 years after my initial purchase. Currently in the inner city block I was living at, prices are over $650k. Remember that 10 years ago these properties were selling for approximately the same price. If I had listened more to my wife and less to my own emotion I might have ended up $300k better off!
What did I learn? I learned that whilst it’s great to listen to “advice”, be aware that sometimes advice might be just a little biased! I’ve learned to trust my own instincts more and weigh advice against what I already know to be true and reasonable. The reason I liked the apartment in my own block was that it was located well. It was quiet, had views, was close to city, walk to tram, bus and train and there was no high-rise in the vicinity. The area couldn’t be quickly re-developed and units added. In short, the amenity was desirable and there was not going to be any new properties added in the foreseeable future. This meant there was a cap on supply.
In the city here is not a cap on supply. There are numerous developments under construction at any given time. I’d be more than happy to live in many of them. But I wouldn’t buy then as an investment! Unless they were in a landmark building of some sort there is no scarcity value in them. They can be replaced easily.
If one of your neighbours wants to sell and needs to move quickly, guess what. They set the price for your unit. You have virtually no control over the market. No matter what you do to your own living space the whole value of the block will be determined by factors outside your control.
Investing in Property for cashflow or for growth?
Let’s be honest. Most of us are investing in property because we think that prices are very likely to go up! On the other hand we all know about “negative gearing”. In essence it means we can write of our “losses” on our investment against other area of income. I don’t disagree with the concept, we ought to be able to weigh our profits against our losses and pay tax on the net result. BUT, if all we own are “investments” that are make a “loss” and we’re offsetting that against a “gain” from our job, that’s not really smart investing is it?
Sometimes a property might be increasing in value at a greater rate than we could expect to make as a cash income from our investment. This is not always the case as you can see from my experience in the Melbourne CBD. But at what point does this cease to be a valid reason for deciding to invest of even “keep” and existing investment? Steve McKnight from PropertyInvesting.com once said something very illuminating at an event I attended. Basically he said we ought to do an audit of our property portfolio every year and re-assess whether we ought to hold or sell each property!
Seriously. I never thought I was going to sell anything – Ever!
Early on in my property journey I’d decided I was going to “Accumulate” property. Buy and never sell! That was my motto. Once I’d paid down the loan I would be sitting on a nest egg and having rent more than cover my outgoings.
But consider this! Real world example -
My unit in inner Melbourne right now would be worth about $650k and yet it might command a weekly rental of around $480. That’s about $25k rental annually.
The yield is therefore 25k/650k annually or 3.8% of the value.
Setting aside things like mortgage repayments, there are still fixed costs on any property – In my case they include for the last financial year:
Council Rates $820
Water $945
Insurance $302
Owners Corporation $1660
Agent fees $1815
Repairs $890
Total fixed expenses for the year $6430
This reduced the total income to ($25000-$6430)=$18570
Now my actual annual return is 18.5k/650k = 2.9%
Of course costs like Agent fees and Owners Corporation are not always applicable but they serve to show that in the real world the actual return can be a lot less than a simple headline figure.
If I include my interest costs (which still exist) I must deduct another ($150000*6%)=$9000 from my income.
This reduced the total Real income to ($18570-9000)=$9570
Now my actual annual return on the asset value is 9.5k/650k =1.5%
Should I Sell this property?
There is no right or wrong answer. Sometimes I say yes and my wife says NO! Sometimes I say No and my wife says NO! Do you see a pattern here?
There is no right answer because everyone has different needs, has different skills and is coming from a different base and most importantly – We all want different things! It depends on your circumstances, your family situation, the personalities of you or your partner and your goals in life.
If our main goal in life was to increase our cash on cash return or all our assets then it would be a no brainer to sell up and invest elsewhere (assuming I could expect a greater return than 1.5%!) Having said all that I still love property, and I love investing in property.
It’s quite possible to love the idea of property without loving investing in property. In fact most property that you’ll “love” will probably be pretty darn useless as an investment. Don’t be confused.
Would I choose to invest $650k of my actual cash in this investment right now of it were available for sale? Probably not! – So why am I still keeping it? I love it and plan to live in it.
This is a question only YOU need to ask yourself and answer on a case by case basis. I’ve looked long and hard at my own situation and decided to keep for now based on family reasons, NOT investing reasons.
Review every property every year
For every investment I currently hold I review the property and make a decision based on the real numbers, not a fantasy of what I’d like to see happen.
That’s why I decided to sell my apartment in the Melbourne CBD.
It was “Costing” my money to hold, and NOT growing in value anything like I’d hoped it would. So I cut it off.
It was why I needed to sell my first home out in the “burbs”.
It was why I made a similar hard decision to sell a property in inner city KEW that was returning a reasonable cash return, and well located but had ZERO capital growth over ten years.
It was one of the reasons I sold a great apartment in Sydney’s North. I had improved it and added value. It was time to take my money off the table.
Your relationship with a property needn’t be a marriage for life. There’s no compulsion to “stay together” till death do you part!.