Simply Junior

Every year the United States government gives away billions of dollars in the form of grants. This money can be used for a number of things including paying for education costs, buying a home, paying down debt, and for the entrepreneur it is a great way to pay for the start up costs of a new business. The best part of getting federal grants for small business start ups is you don’t have to pay the money back.

Think about that if you are seriously thinking about starting a small business. You don’t have to pay the money back. Now most entrepreneurs go a different route when it comes to financing their idea. They either go to the bank and take out a line of credit or loan, or they find investors who are willing to back their idea with investment capital. While this works starting a business owing money places that much more stress on the new business person.

Now if you’re the type of person who doesn’t want to start out with a load of debt hanging over your head then researching and applying for federal government grants can help free you of that burden.

There are many websites on the internet that provide information and resources to help you find the government business grant that works for your purposes. These websites make help expedite the process considerably by categorizing all the thousands grant options and the governmental agencies offering them.

This is important because each grant and granting agency will require different types of information on their application forms. Knowing this beforehand can make filling out the required paper work much easier and ensure that your application is complete. You will also want to try and find out how long the approval process is likely to take because patience is something that most likely will be required.

You may also want to employ the services of either an accountant or lawyer who is familiar with federal government grants. These professionals can help guide you through the process and ensure that your grant request is complete. One important item that most government agencies look for is a workable business plan that outlines how your new business idea will work and how you plan to grow it as time passes. Again, an accountant or lawyer can help with this as well.

Cash flow is a big deal for any entrepreneur who is trying to get a fledgling business off the ground. Owing money is one of the last things that anyone wants to worry about and federal grants for small business can be the perfect way to avoid that problem.

In my experience, people become entrepreneurs for several reasons, including:

o To achieve financial freedom

o Build a business to leave to family

o The ego satisfaction of building a successful business

Yet, most overlook what is arguably one of the fastest, most proven, most profitable businesses there are, real estate investing.

Over the years, more people became millionaires by investing in real estate than any other business.

Guess it is too close to home for many, like the “Acres of Diamonds” story.

One of the big reasons real estate investing doesn’t get considered, is that many people believe it takes a lot of money to get started.

Another group of people have heard of the difficulties in managing rental properties and don’t want any part of them.

Yet another group disdains real estate investments because they are supposed to be illiquid.

These issues, though real, are not insurmountable, but are not the subject of this article.

Here, we are here examining the tremendous wealth building capacity of real estate investing for the budding entrepreneur.

First, let’s make sure we are talking about the same thing. There are many ways of making money in real estate, but not all of them are classified as real estate investment.

If you buy undervalued properties and sell them for more; or buy properties, fix them up and resell them, these are active businesses and not investments.

A real estate investor acquires properties as is or fixes them up and holds them for income for the long term.

Let see what makes this such a great way to achieve financial independence.

Leverage

Whatever amount of money you are starting with can be magnified, or leveraged with bank financing by a factor of ten to one, or even infinitely!

Your $25, 000 cash investment can purchase a quarter of a million dollar asset.

Your $100,000 investment will give you ownership of a $1 Million dollar asset, right out of the box!

Few industries enjoy such trust from the banking establishment. Ever try to get a loan from a bank to start a restaurant?

These days, if you have good credit, you can get started with Zero Down, just as they say on late night TV.

As a matter of fact, I am currently in the process of buying a $260,000 3 family investment property in Philadelphia with 103% financing!

High returns

Real estate builds wealth in many ways.

o Positive cash flow, monthly passive income exceeding expenses

o Your tenants pay off your mortgage, thereby increasing your equity in the property every month!

o Appreciation, or increase in value of the property over time

o Tax shelter-the depreciation deduction can cut your tax bill, increasing your net income

Let’s look at appreciation a little closer. If the property you bought for $100,000 with 10% down appreciates 5% to $105,000 in the next year, (the historical appreciation rate in the US), this represents a 50% return on your $10,000 down payment! Not your average stock market return. But wait, there is more!

Say you collected $300 per month positive cash flow during the year, or $3,600 and paid off $800 of your mortgage. That is $4,400 more or another 44% return on your cash.

Tax benefits

You are able to write off not only your mortgage interest expense, your real estate and insurance costs but you can write off depreciation as well.

The government allows you to write off depreciation, a certain percentage of the building’s value against its income each year. This expense can partially shelter your cash flow. Or even be used to reduce the income from your other sources of income, like your job.

In the above example of the $100,000 house, your depreciation allowance would come to about $3,000 per year, which, if written off against your salary, would yield another $1,000 in cash if you are in the 33% tax bracket.

The total return on your $10,000 investment would therefore be:

Appreciation $5,000

Equity build up $ 800

Cash flow $3,600

Depreciation $1,000

Total return $10,400

That is a 104% return!

As an investor, you can shelter 100% of the gain from taxes when you sell your property, allowing you to invest all the gain into the next property!

Summary

As far as the potential drawbacks mentioned above, management and illiquidity, they can be handled. There are management companies to handle property management and illiquidity can be managed like any other financial variable.

Don’t step over the real estate “Diamonds” at your feet in pursuit of entrepreneurial success. The low start up costs, the “bank-ability” of real estate and its high, tax favored returns to most other businesses can catapult you to unbelievable heights in a few years.

I was able to retire from my National Sales Manager job in computers in only 5 years after my first real estate investment!

Opportunities are everywhere. It just takes time for the person to see what is there and taking advantage of the situation or having someone else get to it first. The reality is that the market is filled with it and even someone with a small budget can launch a business and in the long term make it big.

When the individual was a teen and mom or dad will not give more money for allowance, the person had to do some odd jobs. This could biking around town delivering newspaper early in the morning or mowing the neighbor’s lawn for extra cash.

The entrepreneur can use the experience to start a home maintenance company that offers grass cutting or cleaning services. If the place is covered with snow during the winter, snow plowing can also be offered to clear the roads and the driveways so the vehicles won’t be stuck in the snow.

After enough money has been made, this can be expanded by buying more machines and hiring additional personnel to get work done from the clients. Should the person be good with numbers, this can also be put to good use by helping others. The specialist can ask for a fee for helping people get the papers ready when filing for income tax.

The individual can even set up an office later on to offer counseling services to help people apply for financing when renovating the home or applying for financial aid in school.

Opportunities also come about by filling a certain need. Every year, more than a thousand printer cartridges are finished then thrown away. These things can be refilled making it useable again that could save hundreds of dollars are year that can be used on other expenses. The person can set up an ink refilling business given that the capital is quite small. The only things needed are a few empty cartridges, ink and a few tubes to get it inside.

The empty cartridges can be sourced from offices that are throwing these away that can be returned making it useable. The demand for these things is large so sufficient stock must always be available to cope with the orders. The demands of work can really stress a person out so those who have some cash can start a spa to give special massages and aromatherapy sessions.

The small business can first start with an extra room in the house that can be spread by word of mouth. The person can then rent some commercial space later on to take in more customers who need to relax and recharge those stressed bodies.

The key to any business is good quality and excellent service. Those that were just mentioned are a few good ideas that entrepreneurs have prospered in that could also happen for the person.

There are other small business opportunities out there that do not require a lot of capital to get it started. It will be a good idea to do some research first to find out if a return of investment can be made in the long term.

At the end of the day, the direction it really depends on the individual who will have to spend countless hours balancing revenue versus expenses in order to earn a profit.

For more small business success information be sure to follow the link in the resource box below: